FX Roundup: Mixed start to trading week for major crosses

None of the major forex crosses dominated market proceedings on Monday, but the euro was generally weaker following a less than impressive Eurozone jobs report.

Unemployment in the European common currency area fell slightly in February compared to the previous month, according to data published by Eurostat. Seasonally adjusted unemployment rate dropped to 10.3% in February from 10.4% in January, as expected by analysts.

However, January’s rate was revised up from a previous estimate of 10.3%. Eurostat said it estimated 16.63m men and women in the 19-member Eurozone were unemployed in February, down 39,000 compared to January.

In the 28-member European Union, the unemployment rate held at 8.9% in February compared to January. However, the number of jobless fell 59,000 to 21.65m between January and February.

Jennifer McKeown, senior European economist at Capital Economics, said: “Looking ahead, survey evidence suggests that the Eurozone’s labour market recovery is beginning to slow - the employment indices of both the European Commission Survey and the Composite (manufacturing/services) purchasing managers’ index have both fallen this year.”

At 1617 BST, the euro was down 0.07% and 0.51% versus the dollar and pound, changing hands at $1.1387 and £0.7617 respectively, but stayed broadly flat versus the Swiss franc changing hands at CHF1.0918. Meanwhile, the dollar slipped 0.48% against the yen exchanging at JPY111.15.

Jameel Ahmad, chief market analyst at FXTM, said, “Dollar bears continue to dominate as the US currency continued to receive widespread punishment after the non-farm payroll report [last week] regardless of the headline job number smashing expectations. This suggests to me that there is no confidence in the dollar right now. But the major reason for the ongoing vulnerability when it comes to the dollar is because of pushed back US interest rate expectations.”

“If the US Federal Reserve would have maintained course and continued to outline what [Chairwoman] Janet Yellen had been repeating throughout the whole of last year that the pace of interest rate rises would be slow, rather than unexpectedly surprising investors at the beginning of the year over the prospects of another four interest rate rises in 2016 then I don’t think the dollar would have been so regularly exposed to heavy rounds of selling.”

Elsewhere, selected commodity linked currencies continued to slide during the afternoon session in Europe. The greenback notched a 0.28% gain versus the Canadian dollar changing hands at CAD$1.3047.

The Australian dollar fell 1.24% against the greenback exchanging at US$0.7609, as did the New Zealand dollar which saw a decline of 0.89% exchanging at US$0.6844.

Kit Juckes, head of forex at Societe Generale, said, “The week ahead will focus on the Reserve Bank of Australia meeting, global services PMIs, and Fed and ECB minutes. The RBA is expected to keep rates steady, but it is likely to hew to a firmly dovish stance to try to lean against the Aussie appreciation of the past few weeks.”

“If the RBA were to manage to knock down AUD with a dovish message this week, it would provide for good levels to go long AUD/NZD. We see further upside to the AUD/NZD rally towards 1.17, and 1.09/1.10 is a good zone to go long with a stop at 1.0850.”

Finally, a plethora of other commodity currencies headed lower, particularly in Latin America, with the dollar rising 0.69%, 1.11%, 0.26% and 1.22% against the Mexican, Colombian and Chilean pesos and the Brazilian real.