Dollar lower, Powell & Lagarde speak, Brexit challenge
Fed Chair Powell speaks today at a meeting of the National Association of Business Economics, as traders anticipate his outlook for the economy. ECB President Christine Lagarde warned EU lawmakers that the Bank has done as much as it can to aid economic recovery. EU/UK Brexit talks heat up as the EU has indicated it won’t offer concessions to PM Boris Johnson leading up to his October 15 deadline. The dollar edged lower, equities are up slightly and Treasury yields remain firm. China’s celebrates its Golden Week holiday all week.
“Every time you are tempted to react in the same old way, ask if you want to be a prisoner of the past or a pioneer of the future.”
October 6, 2020
EUR/USD 1.1792 GBP/USD 1.2970 USD/CAD 1.3265 AUD/USD 0.7164 USD/JPY 105.65 USD/CNH 6.7910 USD/ILS 3.4064 USD/MXN 21.3825 USD/CHF 0.9142 USD/INR 73.4612
The dollar is mixed against its peers amid multiple uncertainties, including Trump’s return to a Covid-19 congested White House and Fed Chair Powell’s speech today when he’s expected to repeat his plea for Congress to pass a stimulus bill to help the economy. House Speaker Pelosi and Treasury Secretary Mnuchin continue negotiations for a new stimulus package today. US Treasury yields, which had soared by 6 bps yesterday on increased odds of a Biden victory, are steady overnight.GBP
The UK pound is lower as traders react to comments by EU officials that they are betting that PM Boris Johnson will not give up on negotiations, even if he doesn’t get what he wants by his October 15 deadline. The EU stands ready to continue talks into November and December, as the official deadline is December 31.EURECB President Lagarde spoke today, warning EU lawmakers that the ECB has done as much as it can to support an economic recovery, and not to end fiscal support too abruptly. She repeated that the ECB does not target the EUR exchange rate. The euro is up slightly, trading around $1.18.CAD
The Canadian dollar is barely moved from yesterday’s close despite firm oil and gold prices. New Covid-19 cases in Canada are soaring. Canada’s merchandise trade deficit narrowed slightly from a revised C$2.53B in July to C$2.45B in August. Analysts suggest that unexpected weaknesses in exports and imports point to an economy not recovering as government officials had earlier hoped.ASIA/PACIFIC
China is celebrating its Golden Week, so Chinese markets closed all week. The Chinese yuan (USD/CNY) was unchanged, but speculators are selling USD/CNH (buying offshore yuan) as they assume a stronger Chinese currency going forward.
The Australian dollar fell and was the weakest of the major currencies overnight after traders were disappointed that the Reserve Bank of Australia kept rates unchanged and did not indicate that a rate cut was forthcoming.
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