The currency market ended the week with a mixed trend. While the US dollar found support against risk-sensitive currencies such as the Australian and New Zealand dollars – reflecting a sell-off on the Nasdaq – it struggled to gain ground against the euro and Canadian dollar. The greenback’s performance reflects a market torn between “safe-haven” flows and distinct regional strength.
closing level
-
EUR/USD: 1.1740 (+0.02%) – The euro managed to make a slight gain against the dollar.
-
USD/JPY: 155.82 (+0.16%) – The pair moved higher, with the dollar showing strength against the yen.
-
GBP/USD: 1.3363 (-0.17%) – The pound was one of the worst performers of the day, slipping below the 1.34 handle.
-
USD/CHF: 0.7958 (+0.09%) – The dollar gained slightly against the Swiss franc.
-
USD/CAD: 1.3767 (-0.01%) – The loonie held its ground, outperforming most of its peers due to strong Canadian economic data released earlier in the day.
-
AUD/USD: 0.6649 (-0.20%) – The Australian was hit by broader “risk-off” sentiment.
-
NZD/USD: 0.5802 (-0.10%) – Kiwi followed Aussie low.
Major market drivers in forex today.
1. Canadian Dollar Flexibility (USD/CAD)
The Canadian dollar was an excellent performer against other commodity currencies. While oil prices struggled, the loonie received support from several strong domestic data.
-
Building Permit: increased +14.9% In October, expectations were dashed.
-
capacity utilization: rose to 78.5% In Q3, a sign of tightening in the industrial sector.
-
wholesale trade: A post was made +0.1% Profit versus predicted decline.
2. Risk-off flows hit antipodeans (AUD and NZD)
Australian And new zealand dollar The weakest chiefs of that day were, below 0.20% And 0.10% Respectively. These “high-beta” currencies often act as liquid proxies for global risk sentiment. with Nasdaq tumbling -1.69% and this S&P 500 Below -1.07%Investors withdrew money from these development-linked currencies.
3. Dollar/Yen (USD/JPY) Strength
Despite declines in US equity markets (which generally strengthen the yen), USD/JPY Rose 0.16% To 155.82The pair remains sensitive to the gap between the Federal Reserve’s recent rate cuts and the Bank of Japan’s slow-moving policy normalization,
US bond yields: rising across the curve
Treasury yields are rising today, reversing the decline seen earlier this week. Selling pressure has pushed yields higher across the board, with the long end of the curve leading the way. Point to be noted is that 30-year yield hits highest level since early SeptemberDriven by the market digesting the massive influx of supply – over Treasuries worth $602 billion were sold this week-And reassessing the Federal Reserve’s policy outlook after Wednesday’s cuts.
Current yield level:
-
2-Year Yield: 3.545% (Above +1.5 basis points,
-
5-Year Yield: 3.743% (Above +2.8 basis points,
-
10-Year Yield: 4.178% (Above +3.7 basis points,
-
30-Year Yield: 4.831% (Above +4.2 basis points,
For the week, the second year was the only one to see lower yields this week, despite Fed cuts. ,
-
2-Year Yield: -4.0 basis points
-
5-year yield: +2.7 basis points
-
10-Year Yield: +4.7 basis points
-
30-Year Yield: 5.6 basis points
Fed officials were ready to speak after the black-out period ended. Speaking was Fed’s Hammack (non-voting member but hawk), Chicago Fed President. Goolsbee who dissented without any changes, and President of Cleveland. Schmid also disagreed with making no changes. Below is a summary of his comments:
Cleveland Fed President Beth Hammack
President Hammack, who will become a voting member in 2026, aligned himself with the radical dissidents despite abstaining from voting at the meeting. He emphasized the difficulty of the current economic moment, noting that the labor market is “gradually cooling down”, with inflation remaining persistently above the Fed’s target. Her comments suggest she would have preferred to keep rates unchanged to ensure price stability is fully restored.
-
Balancing Act: That said, balancing both sides of the Fed’s mandate (maximum employment and price stability) is currently “challenging.”
-
Inflation Focus: Highlighted that inflation remains above target, justifying its alignment with the “no change” camp.
-
Prospective Voters: Established himself as a strong voice in the following year’s voting cycle.
Kansas City Fed President Jeffrey Schmid
President Schmidt was one of two officials who dissented in favor of keeping rates unchanged. He argued that the economy still has significant momentum and the labor market appears to be in balance rather than deteriorating. His primary concern is that inflation is “too hot” and that current monetary policy may only be “moderately restrictive”, which, if so, risks undermining the Fed’s hard-won credibility on inflation.
-
Policy Effectiveness: Questions have been raised about whether current rates are actually restrictive enough to effectively bring down inflation.
-
Inflation warning: Bluntly stated that “inflation is very hot” and warned policymakers not to be careless about maintaining credibility.
-
Economic Flexibility: It was observed that the economy is showing momentum and the job market appears to be largely in balance, obviating the need for immediate cuts.
Chicago Fed President Austin Goolsbee
President Goolsbee, generally known for more modest views, dissented in favor of a “pause” to wait for more data. He expressed discomfort at “front-loading” rate cuts when inflation has remained above target for years. Goolsby argued that waiting until the first quarter of the year would have provided the necessary assurance that inflation was indeed trending downward, without the risk of significant damage to the labor market, which he describes as stable.
-
Patience on cuts: The argument was that waiting until Q1 would allow the Fed to be “confident inflation is coming down” rather than treating current pressures as transitory.
-
Labor Market Stability: noted that the “low hiring and low firing” dynamics did not suggest a cyclical recession, meaning there was no immediate need for cuts to save jobs.
-
Persistence of Inflation: Services inflation was highlighted and it was emphasized that one cannot ignore the fact that prices have been rising for four years.
For technical views on major currency pairs heading into the new week:
Wrap the week and put a bow on it.
Thank you for your support this week.
