Dollar higher on Trump's executive orders for Covid-19 relief

US equities are holding firm, the dollar is slightly higher and US Treasury yields lower after President Trump issued executive orders to extend economic aid, as Democrats and Republicans struggle to agree on a broader virus relief package. China tensions increase ahead of August 15 talks. The week will be heavy with economic releases around the world.

This week's economic calendar: 
8.10 US JOLTS Job Openings (June)

8.11 NFIB Small Business Optimism (June), US PPI (July), Eurozone ZEW Survey Expectations (Aug), Canada Housing Starts (July)

8.12 Real Avg Weekly Earnings YoY (July), CPI (July), Eurozone Industrial Production (June), New Zealand Policy Decision

8.13 Initial Jobless Claims (Aug 8), Continuing Claims

8.14 Eurozone Employment and GDP (2Q), Canada Manufacturing Sales (June) and Existing Home Sales (July), China Industrial Production and Retail Sales (July)

  • FX Rates
    August 10, 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 slightly higher following Trump’s executive orders on Saturday. The four orders to provide financial assistance included: 1) unemployment benefits; 2) a temporary payroll tax deferral; 3) eviction protection; and 4) student-loan relief. Democrats and Republicans are still negotiating on a wide-ranging coronavirus relief package. Dollar demand was also fueled as follow-through of Friday’s better-than-expected US payroll data and from a build-up in Middle East tension related to the explosion in Beirut. Traders await a slew of economic data released this week.

    GBP

    The UK pound is slightly higher and the best performing currency against the dollar since Friday. It’s trading above $1.30 for the eighth straight day. Traders await UK Q2 GDP to be released on Friday. Expectations are for a 20.7% contraction (QoQ), which would be one of the worst in Europe. The outlook for the pound has improved somewhat following dovish Bank of England policy and growing expectations that a Brexit trade deal will be struck in the next two months.

    EUR

    The euro is holding below $1.18 in thin August trading. Italy approved more tax breaks for businesses and extra payments to workers in tourism and entertainment. CFTC data showed that large currency speculators are net long the euro for the first time since April 2019. Traders await the closely watched German ZEW report tomorrow, which shows the level of optimism that analysts have about expected development for the German economy over the next six months.

    CAD

    The Canadian dollar is little changed even as oil moved slightly and Canadian interest rates widened their lead over US interest rates. Traders expect a steady CAD this week.

    ASIA/PACIFIC

    Trading was light in Asia with Tokyo and Singapore closed for national holidays. The USD/CNY and USD/JPY currency pairs were steady. US-China tensions increased after China sanctioned 11 US officials, including Senators Rubio and Cruz, in retaliation for US sanctions against 11 Hong Kong officials last week, including HK Chief Executive Carrie Lam.

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Scott Petruska, CFA
WRITTEN BY
Scott Petruska, CFA

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