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By xemarketanalysis February 4, 2019 12:30 pm
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    XE Market Analysis: Sterling Clings to Gains as EU Digs in Heels on Brexit Deal

    OVERVIEW

    • US Dollar still riding the non-farm job gains report wave from Friday
    • Pound holds firm on a potential customs solution for no-deal Brexit
    • The euro is weaker on Eurozone growth concerns

    HIGHLIGHT

    The US dollar has attracted good flows at the start of the week from yield-seekers as the concerns over the US stability have eased. The resolution of the government shutdown and a confident stance from the FOMC have helped the dollar gather back its safe haven status. 

    US DOLLAR

    The US dollar remains bid after Fridays extremely strong non-farm employment numbers added in January. The US economy added 304k jobs while the market was expecting just 165k. The currency strengthened on the back of increased demand to buy the greenback as a yield play. The next focus for the currency will be tone and content of the State of the Union address by President Trump due on Tuesday night Washington time/Wednesday morning London time. 

    BRITISH POUND

    The Pound has held on to recent strength after a report surfaced that in the event of a 'no deal' Brexit, customs would have a temporary period of just waving goods through that came from the European Union - thus alleviating the potential border delays the markets have been concerned about. EU leaders are frosty at best over the idea of conceding on a backstop at the border to Northern Ireland. They are concerned about the risk of goods being smuggled across the border to avoid tariffs over the long term. 

    EURO

    The Euro is weaker today after a tough week last week, where growth for the Eurozone slowed to 1.2% in Q4 against a reading of 1.6% in Q3. ECB President Mario Draghi said the Eurozone economy had performed below expectations and blamed the global economic concerns for this. 

     

    CANADIAN DOLLAR

    The loonie is weaker today after it followed the price of crude oil lower. The crude price dipped lower on lower forecasts for 'black gold.' 

    AUSTRALIAN DOLLAR

    The Aussie dollar has had a rough start to the week after very poor home building data dealt another blow to the economic outlook for the commodity- sensitive economy. 

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