Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

U.S. Dollar Pulls Back On Softer Data, Pre-Holiday Flows

By Kathy LienForexDec 19, 2019 16:28
U.S. Dollar Pulls Back On Softer Data, Pre-Holiday Flows
By Kathy Lien   |  Dec 19, 2019 16:28
Saved. See Saved Items.
This article has already been saved in your Saved Items

Daily FX Market Roundup 12.19.19

By Kathy Lien, Managing Director of FX Strategy for BK Asset Management

The U.S. dollar traded lower against all of the major currencies today following weaker-than-expected data. Existing home sales declined more than anticipated in November, manufacturing activity ground a halt while jobless claims ticked higher. Alone, none of these reports is exceptionally market-moving but together ahead of the holidays they were enough to drive USD/JPY to a 5-day low. Reports that the U.S. and China will sign the Phase 1 deal in January encouraged some who like a set timeline but discouraged others who hoped for more definitive action. At the end of the day, the Phase 1 deal has not been signed, President Trump is “impeached” and U.S. data confirms the Federal Reserve’s worries about weak growth and low inflation. Fed President Bullard sees no reason for rates to change in 2020 and we believe most U.S. policymakers share his view for steady rates next year. These are all reasons why USD/JPY is under pressure and could slip below 109 before the end of the year. Q3 GDP revisions are scheduled for release tomorrow along with personal income and spending numbers.

The currency that benefitted the most from U.S. dollar weakness was the Australian dollar, which traded sharply higher on the back of stronger labor data. Despite reports of weaker job growth from the PMIs, Australia added nearly 40K jobs in November. Increases were seen in part- and full-time work, which helped to drive the unemployment rate down to 5.2%. Between the PMIs and the RBA’s dovishness, investors had been bracing for softer labor data so when this number came out, they were pleasantly surprised and bid A$ higher. Unfortunately the New Zealand dollar did not see the same fate. Although NZ$ also ended the day up against the greenback, it started the NY session lower despite stronger Q3 GDP growth. NZD had been trending higher throughout December, reaching a 4-month high in the process. Part of this weakness can be attributed to softer trade data but having run up so much in the past few months, the underperformance of NZD vs. AUD and other currencies could be nothing more than profit taking.

USD/CAD consolidated ahead of Friday’s Canadian retail sales report. Although the loonie caught a bid this week from a stronger inflation report, between the drop in the wholesales sales index and the staggering 71K job loss in November, which happened to be the largest decline in a decade, the risk is to the downside for spending and the Canadian dollar.

Meanwhile, the worst-performing currency today was sterling, which tumbled for the third day in a row versus euro and U.S. dollar. Retail sales, which had been forecasted higher unexpectedly turned lower in November with spending falling the most this year. On an annualized basis, retail sales growth slowed to its weakest level since April 2018. Numbers such as these show the strain Brexit has on the economy. So it was no surprise that the Bank of England lowered its growth forecast. The central bank voted 7-2 to leave rates unchanged with dissenters calling for an early move to support growth. The number of dissents did not change from November but following such a weak consumer spending report, investors will be looking for the central bank to ease early next year. Euro also extended its losses after the ECB’s staff forecasts showed a potential need for further stimulus.

Last but not least, the Bank of Japan held rates steady and unlike the BoE, the BoJ statement was laced with optimism. The central bank expects growth to accelerate next year as trade uncertainty abates and government stimulus starts to take effect.

U.S. Dollar Pulls Back On Softer Data, Pre-Holiday Flows

Related Articles

Kenny Fisher
CAD Rattled By FOMC, Risk Aversion By Kenny Fisher - Aug 19, 2021

The Canadian dollar is sharply lower on Thursday, as the currency has fallen to a four-week low. Currently, USD/CAD is trading at 1.2809, up 1.18% on the day. FOMC Signals Taper Is...

U.S. Dollar Pulls Back On Softer Data, Pre-Holiday Flows

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email