For now, the US dollar, aka the greenback, further cemented its parochial domination. It yawned its way through a narrow range in the just above JPY155.50. The currency suffered a serious drop from its recent peak of JPY157.90 on November 20. Today, its ups and downs can show us what’s driving current market forces and economic signals.
Meanwhile in Europe, the euro gained traction, advancing to just above $1.1665, putting it somewhat ahead of the high it made last month. Even in the context of mixed economic data this is a positive indication for the eurozone. Gold prices, having reached a peak near $4236 yesterday, are currently slipping through the $4200 mark during the European morning sessions.
Also still going strong is the Australian dollar, which today rose above its previous session’s peak for the eighth day running. This continued upward movement highlights the strength of the currency despite significant international economic headwinds. At the same time, the US dollar has moved back a little below CAD1.3970 as of mid-afternoon trade, also in tune with wider market dynamics.
In its most recent session, the dollar index stabilized by holding major support levels around 99.00 on Monday. Yesterday, it closed just over 99.55. Fluctuations remain evident across various currencies. Sterling fell to a four-day low yesterday morning below $1.3180. It soon bounced back to about $1.3290 by the end of the day. This volatility is a reflection of the continued instability in these currency markets.
In Mexico, the peso has continued to hold the dollar in an extremely narrow range, just around Monday’s settlement of roughly MXN18.3050. With the loonie in particular having retested last week’s low during European trading today, a sign of the still deeply cautious attitude among investors.
As happens often, certain recent economic indicators have gone a long way in establishing the current market perception. That left the final German composite PMI at 52.4, a little better than the 52.1 flash estimate. Furthermore, the index of composite PMI for all economic sectors has been revised up to 52.8 from a flash estimate of 52.4, up from 52.5 in October. All of these figures indicate a much needed and modestly positive turn in economic activity across Europe.
In the UK, upward revisions to the final November services and composite PMIs stood out. The services PMI was revised up to 51.3 and the composite PMI to 51.2, both north of a preliminary print of 50.5. These kinds of changes continue to illustrate the rapid changes in the economic landscape today and what it all means for currency strength.
Markets were little moved by the release of Japan’s final November services and composite PMIs today. These yield results in many ways confirm our more high-level, general global economic sentiment. The Australian dollar’s strength can be contextualized within this framework, as it trades around $0.6565, marking a significant point corresponding to the halfway mark of its sell-off from this year’s high on September 17 (the day of a pivotal Federal Reserve meeting) to a low near $0.6420 on November 21.