Dollar gains on profit-taking of risk assets
The US dollar edged higher as profit-taking was seen in equities and other risky assets. Although Chinese stocks made slight gains, global equity markets and commodity prices in general are lower. Germany reported weak industrial data and the European Commission issued a dire warning about potential effects of Covid-19.
July 7, 2020
EUR/USD 1.1298 GBP/USD 1.2532 USD/CAD 1.3578 AUD/USD 0.6955 USD/JPY 107.63 USD/CNH 7.0161 USD/ILS 3.4526 USD/MXN 22.5228 USD/CHF 0.9415 USD/INR 74.9362
The dollar is slightly higher, as investors take a breather from the extended risk-on rally in equities and foreign currencies. US equities opened lower following weak European and Asian markets. Atlanta Fed President Raphael Bostic said the economic recovery may be ‘leveling off’ due to the recent increase in Covid-19 cases.GBP
The UK pound is slightly higher from yesterday’s close after an earlier sell-off. Traders await tomorrow’s presentation to parliament by UK Chancellor of the Exchequer Rishi Sunak with an update on the UK economy and on new actions by the government to support the economy.EUR
The euro is hovering around $1.13. According to a European Commission report, Europe’s economy will contract more than previously estimated and will take longer to recover. It forecasts eurozone GDP contracting by 8.7%, a percentage point worse than its May prediction. France, Italy and Spain are expected to contract by more than 10%, and Germany by 6.3%. Shares of Germany’s Bayer AG fell by nearly 7% after a US District judge wrote in a court hearing that the proposal for the Roundup-cancer settlement is problematic and will need to be modified.CAD
The Canadian dollar is little changed overnight, trading between the 1.35-1.36 range where its been for most of the month. Prime Minister Justin Trudeau chose not to attend a trilateral summit in Washington to inaugurate the new US/Mexico/Canada trade pact. Canada’s Business Sentiment dropped to its lowest level since the 2008/2009 recession.ASIA/PACIFIC
The onshore Chinese yuan (CNY) dropped briefly below the key 7 level, but now trades virtually unchanged from yesterday’s close. The Chinese government reported that the country’s reserves increased in June by nearly $11bn to $3.112tn.
The Japanese yen continues to trade in the 107-108 trading range in place for most of July.
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