Forex Today: Dollar momentum continues despite US data

The highlight of the Asian session will be the release of China’s trade data for November. Australia will report Building Permits and trade data for October. Later in the day, the weekly Jobless Claims figures from the US will gather attention, along with comments from Bank of Canada Governor Tiff Macklem after Wednesday’s monetary policy decision.

The US Dollar Index (DXY) rose for the third consecutive day, despite lower Treasury yields and weak US economic data. The ADP employment report showed an increase in private payrolls by 103,000, below the market consensus of 130,000. More job data is due on Thursday with Jobless Claims ahead of Friday’s Nonfarm Payrolls. The US 10-year yield fell to 4.12%, the lowest since September 1.

Data from the Eurozone, including Retail Sales and German Factory Orders, came in below expectations. These figures continue to fuel speculations about a rate cut from the European Central Bank (ECB) as early as the first quarter of next year. The German 10-year yield fell to 2.19%, the lowest since May. This unfavorable context has weighed on the Euro, which dropped to its lowest level in three weeks against the US Dollar.

EUR/USD closed at daily lows around 1.0760 and maintains a bearish bias in the short term. On Thursday, Eurozone will release a new estimate of Q3 GDP and Employment, along with German Industrial Production data.

USD/JPY moved sideways, unable to break the crucial resistance around 147.50. The pair held steady despite the movements in the bond market.

USD/CAD closed near its high around 1.3600 amid mixed market sentiment. The Canadian Dollar was not affected by the Bank of Canada’s decision to keep interest rates unchanged and their statement. The central bank is not expected to raise rates again. On Thursday, Toni Gravelle, BoC Deputy Governor, will speak.

Analysts at RBC on BoC:

The option for more tightening was again retained – the governing council “remains prepared to raise the policy rate further if needed.” But the dovish undertone with the rest of the statement suggests that option is not expected to be exercised. 

The upcoming release of China’s export and import numbers from November will be closely watched as it could have an impact on risk sentiment.

AUD/USD failed to hold gains and finished flat, hovering around 0.6550, slightly above the 20-day Simple Moving Average (SMA). The Australian Dollar was not affected by Austarlia’s lower-than-expected growth figures from Q3. Data due on Thursday includes Building Permits and trade figures from October.

Crude oil tumbled more than 4%, with the WTI barrel falling below $70.00, the lowest since June. Gold rose modestly and closed around $2,025 but bearish pressure persists.

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