Currency Daily Market Updates > 2 Dec. 2016

The dollar on Thursday lost ground against a basket of currencies as traders booked gains following a solid November and on caution ahead of Friday’s government payrolls report. The U.S. dollar is trading heavily against most of the major currencies, but the general tone appears consolidative in nature. The DXY index against a basket of six major currencies fell 0.43% to 101.06. It reached a 13-1/2-year peak of 102.05 last week and gained about 3% for a second month in November.
The euro strengthened against the dollar and yen after Reuters reported, citing senior sources with direct knowledge of discussions, the European Central Bank will extend its bond purchases beyond next March and consider sending a formal signal at its policy meeting next week the asset purchase program will eventually end. The single currency was up 0.6% at $1.065 and 0.2% higher at 121.42 yen. The greenback pulled back from an earlier 9-month peak against the yen and was down on the day by 0.3% at 114.12 yen.
The greenback weakened against sterling on a perceived crack in Britain’s “hard Brexit” line on leaving the European Union after Brexit Minister David Davis said Britain would consider paying into the EU budget for market access. The pound at one point was up about 2 cents or 1.6% to a three-week high against the dollar at $1.2696. It settled up 0.6% at $1.2578. A number of major banks have called for the pound to fall to around $1.15 or lower in the first months of 2017 as Britain triggers Article 50 procedures that start a two-year countdown to its EU exit.
The Canadian dollar strengthened against its U.S. counterpart on Thursday as oil extended its rally after major petroleum producers agreed to cut output for the first time in eight years. Gains for the Loonie also came after data on Wednesday showed that the economy accelerated in Q3 at its fastest pace in more than two years as it benefited from a rebound in oil exports, cementing expectations that the BoC will keep interest rates steady next week. The Canadian dollar was trading at C$1.3322 to the greenback, or 75.06 U.S. cents, stronger than Wednesday’s close of C$1.3429, or 74.47 U.S. cents.
The Australian dollar was up 0.50% at 0.7419 overnight as the USD lost ground against a basket of currencies as traders booked gains following a solid November and on caution ahead of Friday’s government payrolls report.
China’s Yuan weakened against the dollar on Thursday, but losses were capped by state-owned banks selling the U.S. currency in the domestic market to offset pressure from the stronger greenback, traders said. Major state-owned banks were seen selling dollars in the onshore forex market for a fourth consecutive day, traders said, in an apparent bid to support the renminbi after the U.S. currency climbed in global markets on surging oil prices and strong private payroll data. The Yuan has gained 0.3% against the dollar so far this week, but was down nearly 1.6% in November, booking the worst month since a one-off devaluation in August 2015.
Brazil’s currency fell on Thursday as traders feared frictions between lawmakers and prosecutors could increase political instability and delay the approval of austerity measures. Senate President Renan Calheiros tried to accelerate on Wednesday the approval of a greatly watered-down package of anticorruption measures but failed to gather enough support for the early vote. Prosecutors have accused the Brazilian Congress of seeking to block the sweeping Car Wash graft probe as it comes close to incriminating several lawmakers. The Brazilian real weakened 2.55%, by far the worst-performing currency in Latin America.
The Indian rupee’s recent slide from capital outflows as well as a controversial government move to withdraw high-value currency notes from circulation has mostly run its course, a Reuter’s poll found on Thursday. The rupee has weakened more than 3% in recent weeks to record lows, pressured by a U.S. dollar rally, capital outflows from emerging markets and worries Prime Minister Narendra Modi’s currency crackdown would severely dent growth. But overnight the INR gained 0.53% against the greenback at 68.22.
The Turkish lira plumbed a record low on Thursday, weakening beyond 3.5 to the dollar as traders cited worries about the political and economic outlook, while concerns about rising oil prices also weighed on sentiment. The lira touched a new low of 3.5075 versus the dollar in late trade.
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