Speculators cover short dollar positions as equity rally pauses

The dollar retraced half of yesterday morning’s sell-off after traders took profits and the initial euphoria of positive vaccine news gave way to the reality of a lengthy timeline. The dollar is flat this morning with little economic news. Trading may be light tomorrow due to the Veterans Day/Remembrance Day observance in the US and other countries.

There will be no FX Daily published tomorrow.

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  • FX Rates
    November 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

    Dollar bearishness paused as FX market speculators took profits. The initial reaction by financial markets to yesterday’s vaccine news was to buy equities and sell the dollar. Also, the uncertainty of the US election decreased over the weekend further hitting the dollar. The dollar is at two-year lows compared to an index of currencies and will likely continue to weaken.

    GBP

    UK trade negotiations with the EU took a back seat to the positive vaccine news from yesterday pushing the pound above 1.32. The September t high of 1.3392 will be tested and likely broken through should positive news on a trade agreement materialize or significant dollar selling resume.

    EUR

    The euro seems stuck in a 1.16-1.1950 range. The ECB Form later this week may provide insights. EU officials came to an agreement today on the size of the European Union’s 7-year spending plan. It has been nearly four months since leaders announced their 1.8 trillion euro financial response package to the coronavirus pandemic. After three months of disputes, the deal today will help curb the quarrels between MEPs and national governments.

    CAD

    The Canadian dollar weakened overnight and this morning despite the price of oil holding most of yesterday’s 8% gain. The loonie may yet test the 1.2966 level from January. Should that resistance break, CAD could strengthen to 1.25.

    ASIA/PACIFIC

    The Japanese yen weakened overnight to trade above 105 but remains in the strengthening trend which began in late March. Higher US Treasury yields are seen as a cause of yesterday's late day sell-off in the yen.

    Onshore renminbi traded below 6.6 for the first time in over two years on yesterday’s vaccine news.

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Peter Compton
WRITTEN BY
Peter Compton

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