Investors look past stimulus and trade negotiations to bid up equities causing dollar to lose ground

The dollar headed toward its 5th day of losses in the past 6 days confirming the view of SVB's Chief Currency Strategist that the US dollar will continue to weaken as we head into 2021. The risk haven benefits the dollar has enjoyed will be less of a factor as uncertainties around election and Covid dissipate. The euro strengthened after PMI data came in better than expected and the pound increased as the UK signed a trade agreement with Japan.

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  • FX Rates
    October 23, 2020

    Rates are not real time. Rates are today's indicative mid-market rates as of time of publishing, which may vary. Please contact SVB for a current quote.


  • USD

    The dollar weakened as markets begin to focus on post-election economic conditions with the assumption a stimulus package will be approved soon. Third quarter earnings results seem to be coming in better than expected helping to drive equities higher which in turn is boosting overall investor sentiment which erodes the dollar's safe haven benefit.

    PMI data for October due out later this morning.

    GBP

    The pound is stronger as UK retail sales for September came in better than expected. Also, the UK signed a trade agreement with Japan having a knock-on effect of lifting optimism that the UK will be able to successfully close a trade deal with the European Union.

    EUR

    The euro is stronger again today after German manufacturing PMI numbers came out strong this morning at 58, higher than the forecast 55.

    The euro led gains vs. the US dollar post the initial Covid impacts from March. The dollar enjoyed a slight rebound as summer ended and the second wave of Covid began to hit. With markets less fearful of an economic collapse due to Covid the euro will resume its gains with the 1.20 level likely this year and 1.25 in 2021.

    CAD

    The Canadian dollar edged up on overall risk-on sentiment. The price of oil has been stable this week helping the loonie gain as the dollar sells off.

    ASIA/PACIFIC

    The Chinese renminbi gained after an official with the State Administration of Foreign Exchange commented that the renminbi’s recent gains are “relatively moderate”. FX speculators interpreted this to mean the Chinese authorities are comfortable with the renminbi gaining as the economy in China outpaces other global economies.

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Peter Compton
WRITTEN BY
Peter Compton

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