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.

Economic Data:
Monday
New Home Sales (Sep)
Chicago Fed Nat Activity Index (Sep)
 
Tuesday
Durable Goods (Sep)
Conference Board Consumer Confidence (Oct)
Richmond Fed Manufacturing Index (Oct)
 
Wednesday
MBA Mortgage Applications (Oct 23)
Retail Inventories (Sep)
 
Thursday
Initial Jobless Claims (Oct 24)
GDP Annualized QoQ (Q3)
Personal Consumption (Q3)
Core PCE (Q3)
Pending Home Sales (Sep)
Eurozone Economic Confidence
European Central Bank meeting
  • FX Rates
    October 26, 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 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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Scott Petruska, CFA
WRITTEN BY
Scott Petruska, CFA

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