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US Dollar Falls as Treasury Yields Retreat Following Bumper Payrolls

US Dollar Falls as Treasury Yields Retreat Following Bumper Payrolls

Find out how the major currencies have been performing and what movement we could see in the days ahead with our weekly exchange rate update.  


EUR – Euro Gains despite Rising Unemployment Rate

The Euro shrugged off a surprise upward revision to the Eurozone unemployment rate, even as signs continue to point towards weakness within the currency union. An upward revision to the finalised Eurozone services PMIs gave investors fresh incentive to buy into the single currency, betting on greater economic resilience.

EUR exchange rates could find further encouragement in the coming week if the latest German economic sentiment index shows improvement. On the other hand, any fresh evidence of the ongoing impact of the Covid-19 crisis could put some pressure on the Euro.

Top EUR data releases:

Apr 12 EUR Eurozone Retail Sales (Feb)

Apr 13 EUR German ZEW Economic Sentiment Index (Apr)

Apr 14 EUR Eurozone Industrial Production (Feb)


USD – US Dollar Weakens after Higher Payrolls

The US Dollar failed to capitalise on a sharp improvement in March’s non-farm payrolls figure and record ISM services PMI growth due to the boost it gave risk appetite, limiting USD safe-haven demand. In addition, risk-on trade increased after the Fed reiterated its dovish stance on loose monetary policy, pushing Treasury yields and the US Dollar lower.  

However, with forecasts pointing towards a sharp rebound in March’s retail sales figure, the mood towards the US Dollar could improve. A return to positive territory for the most recent industrial production data may also offer a boost to USD exchange rates.

Top USD data releases:

Apr 13 USD Inflation Rate (Mar)

Apr 16 USD Retail Sales (Mar)

Apr 16 USD Industrial Production (Mar)


GBP – Pound Dragged Lower by Profit Taking

The Pound found itself on the back foot this week thanks to a bout of market profit taking, dragging GBP exchange rates lower in spite of economic optimism. Even though March’s finalised services PMI confirmed that the sector rebounded at the end of the first quarter, the Pound tumbled.

Even so, as non-essential retail reopens in the next step of the national lockdown easing, this could give GBP exchange rates support. On the other hand, if February’s gross domestic product report proves lacking, the Pound could face fresh selling pressure.

Top GBP data releases:

Apr 13 GBP Balance of Trade (Feb)

Apr 13 GBP Industrial Production (Feb)

Apr 13 GBP Gross Domestic Product (Feb)


AUD – Australian Dollar Pressured after RBA Meeting

The Australian Dollar found no support in the wake of the Reserve Bank of Australia’s (RBA) April policy decision. While policymakers expressed greater optimism over the current state of the economic recovery, this was not enough to shore up AUD exchange rates in the face of a wider sense of market risk aversion.

If March’s unemployment rate dips, the Australian Dollar could gain against its rivals in the coming week. However, evidence that domestic confidence has continued to weaken may well leave the ‘Aussie’ under a degree of pressure.

Top AUD data releases:

Apr 13 AUD NAB Business Confidence Index (Mar)

Apr 14 AUD Westpac Consumer Confidence Index (Apr)

Apr 15 AUD Unemployment Rate (Mar)


ZAR – Rand Shored up by Manufacturing PMI Strength

The South African Rand benefitted from an unexpectedly strong improvement in March’s manufacturing PMI, pointing towards greater resilience within the sector. As worries over the economic outlook temporarily diminished, this helped to keep the Rand on a positive footing, even among a wider deterioration in market sentiment.

Looking ahead, the Rand may struggle to find fresh traction against its rivals with forecasts pointing towards negative domestic data. Any deterioration in mining production and retail sales could well put a renewed dampener on economic confidence.

Top ZAR data releases:

Apr 13 ZAR Mining Production (Feb)

Apr 14 ZAR Retail Sales (Feb)


CAD – Canadian Dollar Slips despite PMI Uptick

The Canadian Dollar failed to benefit from an unexpectedly large surge in the Ivey PMI. While the business confidence index jumped from 60 to 72.9 in March, other concerns weighed on CAD exchange rates as speculation over the global economy continued.

Evidence of continued weakness within the Canadian labour market could well drag the Canadian Dollar lower next week. As long as employment conditions show no real signs of improvement, support for CAD exchange rates looks set to diminish.

Top CAD data releases:

Apr 15 CAD Manufacturing Sales (Feb)

Apr 15 CAD ADP Employment Change (Mar)

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