Dollar gains with focus on new virus restrictions
For the first time in a week, the US dollar is opening higher. Investors are moving into the dollar primarily as a safe haven play, as focus changed overnight to soaring Covid-19 cases and on new restrictions on individuals, cities and countries to contain it. This morning’s US labor data was disappointing: Initial Jobless Claims for the week ending November 14 came in at 742K, compared to expectations of 700K. It was the first time in five weeks that applications for US state unemployment benefits rose. Equities and US Treasury yields are both opening slightly lower. Oil and gold prices are trading lower.
November 19, 2020
EUR/USD 1.1832 GBP/USD 1.3218 USD/CAD 1.3095 AUD/USD 0.7272 USD/JPY 103.9900 USD/CNH 6.5781 USD/ILS 3.3479 USD/MXN 20.2318 USD/CHF 0.9126 USD/INR 74.2725
Overnight, the dollar edged higher across the board. The higher open this morning was the first such time in six trading days. Global investors have refocused attention on accelerating cases of the pandemic which is spurring tough new restrictions both here and abroad – New York City announced they are closing schools, South Australia began one the world’s tightest lockdowns and Tokyo raised its virus alert after daily infections reached 500 for the first time. US equities are opening 1% lower, US 10-Year Treasury yields are 0.86%.GBP
The UK pound fell for the first time in a week, as pressures increase with the ongoing UK-EU trade talks. EU leaders are pushing the European Commission to prepare for a “no-deal” outcome as the December 31 deadline approaches.EUR
The euro is lower by 0.2% in-line with broad dollar strength. Much of the EU is in lockdown amid a second wave surge of the pandemic. However, Hungary and Poland are blocking the $2 trillion in disbursements related to EU’s economic relief package, as they both argue against linking any transfers to the “rule of law” – basically, a fight against the EU’s core democratic values.CAD
The Canadian dollar outperformed most other G-10 currencies, but edged lower in-line with broad US dollar strength. Oil prices have slightly lower after firming during the entire month of November.ASIA/PACIFIC
The South Korean won led Asian emerging market currencies lower, as its government showed concern with the recent gains in the currency. SK’s Finance Minister said it will take active measures “at any time” to stabilize the currency.
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