Daily Currency Update

USD - US Dollar

The unexpected decline in October's JOLTS job openings led to speculation about Federal Reserve rate cuts next year. However, November's strong ISM services figures counterbalanced this in terms of foreign exchange impact. Despite weak JOLTS data, the dollar stays strong, indicating a less aggressive foreign exchange market stance due to mixed US economic signals. Today's ADP payroll release, although not predictive of actual payroll, can influence markets; expectations are at 130k. Other data like MBA mortgage applications and trade balance figures are unlikely to impact markets significantly. With key US payroll data and a Fed meeting coming up, markets are cautious, anticipating the Fed might oppose rate cut expectations, particularly if data doesn't decline. Given the euro's weak momentum, a slightly bullish outlook on the dollar is maintained until the Fed's meeting.

CAD - Canadian Dollar

The Bank of Canada is expected to keep interest rates unchanged in its upcoming announcement. The focus is on whether the BoC will recognize the worsening economic outlook and reconsider further rate hikes. Despite dovish remarks and weak third-quarter growth, strong recent job figures in Canada suggest continued concern about labor market tightness leading to inflation. It's believed the BoC will maintain a hawkish stance to counteract rate cut expectations. With the market anticipating about 100 basis points of easing next year, a hawkish stance could revise expectations and support the Canadian dollar (loonie). However, the loonie's strong link to U.S. data means external factors will continue to be the main influence. Observe USD/CAD trends.

EUR - Euro

Short positions in the euro are currently popular in the foreign exchange market. Hawkish comments from Isabel Schnabel, indicating a shift from rate hikes to cuts, have put additional pressure on the euro. The current decline in EUR/USD aligns with short-term rate differentials, and a further drop to around 1.06 wouldn't be unusual. This suggests it's too soon to expect a rebound in EUR/USD or in euro crosses. With no European Central Bank speakers scheduled today and only October retail sales data from the eurozone, which typically doesn't impact the market, there's no immediate sign of a euro recovery. Germany's significant drop in factory orders for October will likely maintain the negative outlook for the euro. EUR/USD is nearing the 1.0770 support level, and breaking below this could increase bearish momentum. A fall to 1.0700 by the weekend is feasible if the dollar stays strong.