Dollar lower, bleak OECD outlook, FOMC meets today
The dollar continued a decline which began mid-May. A bleak economic forecast by the Organization for Economic Co-operation and Development (OECD) stalled global equity markets. Investors await today’s Federal Reserve FOMC meeting. Although no change in rates is expected, investors will be closely following Fed Chair Powell’s comments about the Fed’s continued support of the economy and the potential targeting of yields for some Treasury maturities. This morning’s US CPI for May was -0.1% MoM versus 0.0% expected. Oil prices are slightly lower and gold is trading higher.
June 10, 2020
EUR/USD 1.1369 GBP/USD 1.2753 USD/CAD 1.3412 AUD/USD 0.6998 USD/JPY 107.3200 USD/CNH 7.0602 USD/ILS 3.4353 USD/MXN 21.9066 USD/CHF 0.9453 USD/INR 75.5925
The dollar is trading lower, continuing a trend in place since mid-May and reaching levels not seen since early March. The nearly three-month long risk-on rally has mostly benefited commodity-related currencies and those with attractive yields – RUB, AUD, NOK and MXN are the top performers in Q2. Traders expect more support from the Federal Reserve in today’s 2pm announcement.GBP
Dollar weakness has helped the UK pound make gains for 10 straight days – its longest winning streak since April 2012. PM Boris Johnson announced that zoos, safari parks and drive-in cinemas will reopen in England from June 15.EURFrench industrial output fell by 20.1% on the month in April due to Covid-19, worse than expectations of a 18.6% decline. Nevertheless, the euro marched higher and is now approaching $1.14, last seen on March 10. Traders await tomorrow’s eurozone finance minister meeting to discuss the EU’s recovery package.CADThe Canadian dollar edged higher amid broad US dollar weakness, and despite slightly lower oil prices. No major Canadian economic data is scheduled for today.ASIA/PACIFIC
Asian currencies continued to gain versus the US dollar. The AUD gained the most overnight by 0.70%. The Chinese yuan gained 0.25% at 7.05, well away from 7.1778 just nine days ago. Traders are showing confidence that a US-China trade deal is safe.
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