Dollar higher amid new European lockdowns and restrictions

New lockdowns and social restrictions in Germany and France to stem the latest Covid-19 surge has investors scrambling for safety. The US dollar and global bonds are up across the board as European equity markets tumble. The US equity market “fear gauge”, the VIX Index, climbed to its highest level since June. Oil and gold, and other so-called “risky assets” are all lower.

“In the midst of chaos, there is also opportunity.”
Sun Tzu
  • FX Rates
    October 28, 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 is up across the board as a safe haven asset in light of newly announced lockdowns and restrictions in Europe. The dollar index is up nearly 0.75% to its highest level in two weeks. US futures are opening lower despite upbeat earnings reported by two bellwether companies, General Electric and Boeing. Analysts are revisiting the possibility of a contested US presidential election.

    GBP

    The UK pound is lower overnight by 0.75% and below $1.30 for the first time in two weeks on risk-off selling. Intense Brexit negotiations continue, as both sides are now driven to complete a deal by mid-November.

    EUR

    The euro fell by more 0.50% and the German DAX equity index dropped 4% after German Chancellor Angela Merkel announced a proposal to close bars and restaurants for a month to stem the rise in Covid-19 infections. French President Macron is expected to impose a month-long national lockdown.

    CAD

    The Canadian dollar is lower by 0.75%, as traders rush to the safety of the US dollar. Lower oil and other commodity prices are helping push the loonie lower as well. Traders await today's Bank of Canada announcement, no change is expected.

    ASIA/PACIFIC

    The Japanese yen gained overnight as a safe haven currency, trading at the lower end of its 104-105 trading range.

    China announced they will be changing the formula for the daily USD/CNY fixing, which may lead to more volatility in the currency pair. The details of the adjustment have not been provided at this time. The CNY is slighter weaker overnight.

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Scott Petruska, CFA
WRITTEN BY
Scott Petruska, CFA

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