The euro holds gains after signing of first ever stimulus package while dollar continues to slide against most currencies
The dollar continues its downward trajectory as financial markets see more promising economic activity in Europe and elsewhere. The British pound shoots up over 1.27 on hope of a vaccine and positive sentiment on Brexit talks. Commodity currencies like the Canadian and Australian dollar both see large demand as the price of oil and other commodities rally on expectations of a stronger economy in the second half of the year.
July 21, 2020
EUR/USD 1.1444 GBP/USD 1.2695 USD/CAD 1.3458 AUD/USD 0.7093 USD/JPY 107.0800 USD/CNH 6.9866 USD/ILS 3.4245 USD/MXN 22.3314 USD/CHF 0.9391 USD/INR 74.7450
The US dollar continues to sink relative to a basket of currencies and is now down 2% since the start of the month. With the Fed having cut interest rates to zero, US Treasuries are not as attractive relative to other countries. Also, the outlook for the US economy suddenly looks less certain with Covid less contained relative to other developed countries and the US election looming in under 4 months.GBP
The pound shot over 1.27 again after leaders on the Continent agreed on a stimulus package. Also, the sentiment around Brexit negotiations is hopeful of a solution before year end.
Households in Britain are suffering the biggest shock to income since the 1970s, according to reports from think tank, the Resolution Foundation. The report said real wages have dropped 4.5% as a result of the pandemic, despite wage support programs.EUR
The euro briefly traded over 1.15 after the EUR750B ($860B) stimulus package was agreed upon. Some economists see Europe outperforming the US over the next 6 months due to central bank interest rates being relatively close and Europe generally doing a better job handling coronavirus.CAD
The Canadian dollar strengthened on the back of a significant increase in the price of West Texas Intermediate. Oil has been stuck at roughly $40/bbl since doubling from end of April. With the Europeans passing a large stimulus package the outlook for oil demand has brightened significantly.ASIA/PACIFIC
The Australian dollar is trading at its strongest level since April 2019 on overall US dollar weakness and strong commodity prices.
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