Geo-political safe-haven dollar buying replaces economic optimism
May 27, 2020
EUR/USD 1.0998 GBP/USD 1.2269 USD/CAD 1.3765 AUD/USD 0.6606 USD/JPY 107.7900 USD/CNH 7.1683 USD/ILS 3.5023 USD/MXN 22.2621 USD/CHF 0.9706 USD/INR 75.7162
The dollar is flat to start the trading day. After the initial 8% surge in the US dollar since the Covid crisis started the greenback has given back 5% of those gains. Some FX speculators see the renewed US/China tension soon replacing Covid as the largest creator of FX volatility.
The Federal Reserve’s Beige Book will be released later this afternoon.GBP
The pound slipped as concerns over next week's restart of UK/EU trade negotiations sapped the recent pound rally.EUR
The euro gained versus the US dollar on news of a possible EUR 750B stimulus package. The new spending became possible after Germany and France signaled over the weekend a willingness to increase spending to support the broader European economy.CAD
The Canadian dollar strengthened to its strongest level in two months as the price of oil held steady. Russia signaled a possible end to the supply cuts instituted at the start of the Covid crisis as oil demand begins to recover.ASIA/PACIFIC
The off-shore Chinese renminbi weakened to 7.18 as the financial markets expect the Chinese authorities to manage the on-shore CNY to weaker levels. China is butting heads with the US on multiple fronts including the recent crackdown on pro-democracy protesters in Hong Kong.
The Japanese yen weakened slightly as the government prepares a second stimulus package to counter the negative impact of Covid. The massive economic package could total 20% of Japan’s annual GDP.
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