USD: 2017 is off to a rocky start
Last week marked another weekly loss for the USD in what has been a markedly rocky start to the year. January’s jobs report weighed on the greenback as unemployment ticked up and wage gains were just half what investors expected, stoking concerns that the Fed won’t be raising interest rates any time soon. In contrast to these concerns, Chicago Fed President Charles Evans was far more upbeat, saying that the report was “very good”, echoing the view of other Fed members who have said they expect wages to pick up as the economy nears full employment.

Investors seem slightly more optimistic for the dollar’s outlook, turning their attention to European concerns which helped the dollar firm up on Monday morning.

EUR: Is Frexit keeping you up at night?
Far-right French presidential hopeful Marie Le Pen published her political manifesto over the weekend. It outlines 144 “commitments” of her policy platform that include abandoning the euro and possibly leaving the EU altogether.

The likelihood of Le Pen’s success seemed remote until a few weeks ago when frontrunner François Fillion’s campaign was rocked by allegations of misdirecting government funds to his wife. The scandal has pushed him squarely to the back of the pack of polls. While Le Pen still lags behind her pro-European opponent Emmanuel Macron in most polls, the upsets of Brexit and the American elections have shaken investor’s confidence in polling. The rise of global populism is one of the key themes of 2017, and with European politics in focus political risk may well continue to weigh on the euro.

GBP: Theresa May is not messing about, “out means out”
Theresa May continues to toe the line as she pushes her Brexit plan through parliament.
After passing a vote in the lower house, she will face off with legislators in the House of Lords. May has been adamant to keep her March deadline and defends her plan tooth and nail. A spokeswoman for the prime minister told Reuters that out means out: “We are not going to allow there to be attempts to remain inside the EU or rejoin it through the back door.”

CAD: Follow the oil
The Canadian dollar is moving in tandem with oil prices as we start the week. Weaker oil means weaker CAD, and it gave up a cent against the dollar on Monday. Domestic data is heavy this week for CAD, and the currency could start to trade on domestic factors with any surprises for growth, inflation, or employment prints to keep investors busy.

JPY: Loving the risk-off trade
A circuit of concerns from the Trump trade to the French elections have caused investors to shy away from riskier trades, which bodes well for the yen. The yen continues to gain on Monday morning as headlines rang with apprehension about the populist movement in Europe. President Trump will meet with Japanese Prime Minister Shinzo Abe on Friday, Abe is expected to focus on Japan’s investment in the US. Trump has been a critical of Japan since the election so this meeting will be closely watched for dollar/yen moves.