Dollar selling continues despite hit to US/China relations

Safe-haven status could not rescue the relentless selling of the US dollar selling which continues for the 4th day leaving the dollar down 2.7% in July. News that the US is closing the Chinese consulate in Houston briefly sent the dollar higher, but the greenback sold off again within a few hours. The UK signals a trade deal with the EU may not be possible temporarily sinking the pound. The euro powers upward and may hit the 1.18 important technical level.

“Play by the rules but be ferocious.”
Phil Knight
  • FX Rates
    July 22, 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

    The dollar continues to sell off on concerns the US will lag many other developing countries due to a poor response to the pandemic. President Trump during a press conference read that Covid in the US “will probably get worse before it gets better” and asked Americans to wear masks for the first time.  Financial markets see this as a clear indication that Europe is now months ahead of the US in fighting the pandemic.

    Existing home sales for June later this morning.

    GBP

    The British pound strengthened versus the US dollar due to overall dollar bearishness. Late yesterday afternoon the pound weakened suddenly when UK government ministers said they did not think a trade agreement with the EU would be successfully negotiated by the current deadlines. The pound quickly corrected as markets generally read the news as a negotiating tactic.

    EUR

    The euro powered higher relative to most all currencies as it continued its' relentless march higher. The agreement on a 750B euro stimulus package is widely seen as a hallmark of not only economic support but a new consensus across European governments to work together.

    CAD

    The Canadian dollar weakened versus the US dollar on the back of weaker oil prices. Oil dropped after inventories in the US showed a larger increase than expected leading oil traders to conclude the reopening of the US economy is not translating into as much gasoline consumption as expected.

    ASIA/PACIFIC

    The Chinese renminbi weakened on concerns of poorer overall US/China relations after the US closed a Chinese consulate in Houston.

    The Australian dollar hit a fresh high to the US dollar despite weaker energy prices and US/China stresses.

    The Japanese yen weakened relative to the dollar due to Covid cases increasing in Tokyo.

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Peter Compton
WRITTEN BY
Peter Compton

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