| November started positively for the US dollar as nonfarm payrolls beat expectations. The hints from the Federal Open Market Committee that it may hike interest rates in the future further boosted the currency. But by the middle of the month, the currency felt pressure from dovish comments of some Federal Reserve officials. While Fed Chairman Jerome Powell sounded optimistic initially, later he hammered the greenback by stating that interest rates are close to neutral levels. The dollar recovered a bit after the FOMC policy minutes showed that the Committee members expected rate to be lifted "fairly soon." Euro had some supportive factors in November, like the US midterm elections that resulted in a split congress. But there were much more negative ones, arguably the most important of them being the continuing clash between the European Union and Italy about the Italian budget deficit target. US tariffs were not helping the currency either. Major macroeconomic releases, including eurozone inflation and German gross domestic product, were rather disappointing. Brexit speculations remained the major driving force for the Great Britain pound. While the sterling rallied during the month on hopes for a Brexit deal between the EU and Britain, the currency crashed after two ministers resigned. Afterwards, the pound remained under pressure from fears of a no-deal scenario. The Japanese yen was extremely weak in November despite the hawkish Bank of Japan. Japan's economy declined in the third quarter of this year, but economists predicted a rebound in the fourth quarter. Talking about declining economies, Swiss GDP also contracted unexpectedly, sending the Swiss franc lower. November started poorly for the Canadian dollar as better-than-expected US nonfarm payrolls weighed on the currency, while Canada's own employment data was poor. The court's decision to halt construction of a pipeline that was designed to bring crude oil from Canada to the United States hurt prices for crude oil, Canada's major export, and consequently hit the loonie. In fact, the crashing oil prices was the main negative factor for the currency in November as crude demonstrated the worst monthly performance in a decade. By the end of the month, the loonie also got hit from the unexpected decline of Canada's GDP. The Reserve Bank of Australia continued to suggest that it does expect an interest rate hike in the near future, though anticipates that the next move in rates will be indeed a hike, not a cut. Meanwhile, the International Monetary Fund said that "the balance of risks to economic growth is tilted to the downside." Nevertheless, the Aussie ended November as one of the strongest currencies. The New Zealand dollar was also among the strongest. Among the positive factors supporting the currency were superb employment data and the announcement that the Reserve Bank of New Zealand eased lending restrictions for banks. As usual, gold was moving inversely to the US dollar for the most part, declining by the end of November due to the hawkish FOMC policy minutes, but ending the month with gains nonetheless. |
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