The US dollar fell broadly on Friday after posting gains the last three weeks as a solid, but not spectacular, U.S. non-farm payrolls report came in weaker than expected, but still enough for the Fed in December, and wages and participation rate fell. Analysts, however, said the dollar’s weakness was just a short-term correction, a much-needed one, after a strong rally in the wake of Donald Trump’s victory in the U.S. presidential election on Nov. 8. The dollar index posted its first weekly fall in four weeks against a currency basket, but was still up1.7% for the year. The DXY was down 0.4% to 100.77.
The euro was slightly down by 0.22% against the greenback at $1.0657, ahead of Sunday’s Italian Referendum. The referendum could reject constitutional reforms on which Prime Minister Matteo Renzi has staked his political future. The results will soon be released today. The euro’s one-week implied volatility, a gauge of the currency’s expected movements in either direction, rose on Friday to the highest level since Britain’s June vote to leave the EU. Against the yen, the dollar fell 0.4% to 113.69 yen.
A broadly stronger sterling posted a fifth consecutive week of gains against the euro on Friday, its best run in nine months, as investors’ fears over a “hard Brexit” that would see Britain lose access to the European Union’s single market eased. The pound jumped to a three-month high against the single currency and a two-month high against the dollar on Thursday, staying close to those levels on Friday, after Britain’s Brexit minister said the government would consider paying into the EU budget in order to keep market access.
Denmark’s foreign exchange reserves fell by 0.1 billion to 449.8 billion Danish crowns ($64.4 billion) in November from 449.9 billion crowns at the end of October. The decrease reflected the government’s net repayment of foreign debt, and the central bank did not intervene in the foreign exchange market in November, it said. The central bank use the foreign exchange reserves as a tool to control the rate of the Danish crown, which is pegged to the euro, by buying or selling.
The Canadian dollar notched a six-week high against its U.S. counterpart on Friday as domestic jobs rose for the fourth straight month and oil climbed, sustaining strength since OPEC’s decision midweek to cut crude output. For the week, the Loonie rose 1.8%, its biggest gain in eight months. The Canadian dollar ended at C$1.3283 to the greenback, or 75.28 U.S. cents, stronger than Thursday’s close of C$1.3317, or 75.09 U.S. cents. The currency’s weakest level of the session was C$1.3319, while it touched it’s the strongest since Oct. 21 at C$1.3254. Speculators increased bearish bets on the Canadian dollar, according to Commodity Futures Trading Commission data. Net short Canadian dollar positions rose to 18,576 contracts in the week ended Nov. 29 from 17,462 in the prior week.
The Aussie was up 0.39% against the greenback as the US dollar slipped after the US jobs report that disappointed investors. Analysts see the Australian dollar staying low, reflecting expectations of U.S. dollar strength on wagers of higher inflation and interest rate in the United States. A Reuter’s poll of 51 analysts saw the Aussie slipping to $0.7400 in one month, from $0.7550 in the November poll, and a current reading of $0.7426. The median prediction was for further modest losses to $0.7300 in three and six months and $0.7200 in one year’s time. The Aussie has dropped more than three cents since the election of Donald Trump as the next U.S. president and a near certain interest rate hike by the Federal Reserve in December. Yet, the Aussie is still up 2% this year.
China’s Yuan firmed against the dollar on Friday and looked set for its biggest weekly gain in more than four months, thanks to continued support from state-owned banks and a retreat in the U.S. dollar, traders said. Major state-owned banks sold dollars in the market for a fifth straight trading day, traders said, offsetting dollar purchases by companies on Friday.
“The dollar’s retreat overseas offered a chance for the Yuan to firm slightly, but the overall trend for the Yuan to depreciate has not been changed,” said a trader at a Chinese bank in Shanghai. The CNH HIBOR, set by the Treasury Markets Association, rose to 7.159% for overnight contracts on Friday, the highest in two months. It was 4.81833% on Thursday.
Malaysia’s central bank announced new measures on Friday to boost liquidity and encourage more domestic trade of the ringgit, as it looks to stem the currency’s recent slide against a surging U.S. dollar. Bank Negara Malaysia said in a statement that exporters could only retain up to 25% of export proceeds in a foreign currency, while the remainder must be converted into ringgit. Higher balances would need BNM approval, it said. Exporters are also able to hedge and unhedged up to 6 months of their foreign currency obligations.
The Brazilian real seesawed on Friday as increased central bank intervention partially offset local political concerns. The real was nearly flat after weakening more than 2.3% on Thursday amid fears that friction between lawmakers and prosecutors could increase political instability and delay the approval of austerity measures. The bank rolled over all of the $6.5 billion worth of swaps maturing in December as foreign exchange volatility spiked following the election of Donald Trump to the White House. It had refrained from rolling over any of the swaps that matured between May and November, seeking to reduce its costly exposure to the swaps, currently at $26.5 billion.