Dollar higher amid rise in coronavirus cases, stimulus stalemate
The dollar is broadly higher amid a risk-off mood in the markets. Global investors are faced with a challenging culmination of uncertainties: 1) a surge in Covid-19 cases in the US and Europe; 2) doubts that an economic stimulus package will be passed before next week’s elections; 3) uncertainty related to US earnings season; 4) reduced odds of a democratic sweep; and, 5) a full schedule of economic releases. Global equities and bond yields are opening lower. Oil is slightly lower and gold is higher.
October 26, 2020
EUR/USD 1.1822 GBP/USD 1.3021 USD/CAD 1.3185 AUD/USD 0.7129 USD/JPY 104.9500 USD/CNH 6.7030 USD/ILS 3.3811 USD/MXN 20.9875 USD/CHF 0.9069 USD/INR 73.8500
The dollar is higher across the board amid multiple uncertainties. Traders are focusing on the surge in coronavirus cases here and in Europe and doubts about a US stimulus package being passed before next week’s elections. The dollar index is up nearly 0.5%. Its biggest gains are against commodity-EM currencies – up 1% vs MXN, and up 0.5% against BRL and RUB. Traders await Thursday’s important release of US Q3 GDP – the Bloomberg survey is for an increase of 31.8% QoQ.GBP
Despite wide swings, the GBPUSD currency pair is little changed over the weekend. Traders were buyers of the pound following positive signals from Brexit negotiations, but then were overcome by broad dollar strength amid the risk-off mood in the markets.EUR
Despite last Friday’s upbeat Eurozone PMI data, the euro is lower against the dollar by 0.35%, in line with broad dollar strength. News that French President Emmanuel Macron may soften his demands for French fishing rights in the EU/UK Brexit negotiations has improved the odds of an agreement before the year-end deadline.CAD
The Canadian dollar is weaker on the back of a broadly stronger US dollar and lower oil prices. A Bloomberg Nanos Confidence gauge showed that fewer consumers are optimistic about the country’s economic outlook.ASIA/PACIFIC
The Chinese yuan is lower due to broad dollar strength and uncertainty related to the Communist Party’s meeting this week, when they will update their five-year plan for economic development.
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