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)
August 10, 2020
EUR/USD 1.1773 GBP/USD 1.3089 USD/CAD 1.3343 AUD/USD 0.7176 USD/JPY 105.92 USD/CNH 6.9605 USD/ILS 3.4070 USD/MXN 22.3716 USD/CHF 0.9157 USD/INR 74.9000
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.
For more analysis on FX markets or information regarding SVB's FX services:
See all of SVB's latest FX information and commentary at www.svb.com/trends-insights/foreign-exchange-advisory
By providing your email address and clicking on the Subscribe button below, you consent to receive emails from Silicon Valley Bank for your chosen categories. You also consent to the terms of our Privacy Notice. If you have privacy questions, you may contact us at PrivacyOffice@svb.com. You can withdraw your consent at any time.
Thank you for subscribing to SVB's Daily FX Update.
You're almost done. Please check your email box and follow the instructions to confirm your subscription. If you did not receive an email please check your Spam or Bulk E-Mail folder just in case the confirmation email got delivered there instead of your inbox. If so, select the confirmation message and mark it Not Spam, which should allow future messages to get through. Please add us to your trusted list of senders, contacts or address book.
Please note that we will continue to send you communications that we need to send you (for example, to keep you updated on operational changes to your account, a product or a service) or that we are required to send you by law.
This article is intended for U.S. audiences only.
©2021 SVB Financial Group. All rights reserved. Silicon Valley Bank is a member of the FDIC and the Federal Reserve System. Silicon Valley Bank is the California bank subsidiary of SVB Financial Group (Nasdaq: SIVB). SVB, SVB FINANCIAL GROUP, SILICON VALLEY BANK, MAKE NEXT HAPPEN NOW and the chevron device are trademarks of SVB Financial Group, used under license.
The views expressed in this email are solely those of the author and do not reflect the views of SVB Financial Group, or Silicon Valley Bank, or any of its affiliates. This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part upon information from third-party sources that we believe to be reliable, but which has not been independently verified by us and, as such, we do not represent that the information is accurate or complete. The information should not be viewed as tax, investment, legal or other advice nor is it to be relied on in making an investment or other decisions. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to the material should be construed as a solicitation or offer, or recommendation, to acquire or dispose of any investment or to engage in any other transaction.
Foreign exchange transactions can be highly risky, and losses may occur in short periods of time if there is an adverse movement of exchange rates. Exchange rates can be highly volatile and are impacted by numerous economic, political and social factors, as well as supply and demand and governmental intervention, control and adjustments. Investments in financial instruments carry significant risk, including the possible loss of the principal amount invested. Before entering any foreign exchange transaction, you should obtain advice from your own tax, financial, legal and other advisors, and only make investment decisions on the basis of your own objectives, experience and resources.