The US dollar sank due to weekly employment data worse than expected as both initial and continuing claims rose
The US dollar was under pressure even before the release of weekly jobless claims as FX markets weighed the strength of the US economy relative to other global economies. The euro is stronger on news the European Central Bank kept its overnight deposit rate and bond-buying levels unchanged. The UK pound slid on negative news associated with post-Brexit trade discussions with the European Union.
"Where the willingness is great, the difficulties cannot be great."
September 10, 2020
EUR/USD 1.1894 GBP/USD 1.2975 USD/CAD 1.3126 AUD/USD 0.7310 USD/JPY 106.12 USD/CNH 6.8307 USD/ILS 3.4132 USD/MXN 21.2396 USD/CHF 0.9066 USD/INR 73.4637
The US dollar is significantly weaker this morning after weekly jobless claims showed an increase in those continuing to seek unemployment benefits. Economists had expected both initial claims and continuing claims to drop. The data supports the argument that the US economy will struggle to gain pre-Covid levels and will cause the US dollar to weaken.GBP
The British pound lost ground vs. most currencies as FX markets see a high chance of the UK economy weakening as trade discussions with the European Union fail. The weakness in the pound may begin to price in political risk as Boris Johnson's government seems to be losing on both its domestic and trade agenda.EUR
The euro added to overnight gains vs. the US dollar after the European Central Bank kept the benchmark overnight deposit rate at -0.50% following a regularly scheduled meeting. The ECB also kept their bond-buying program (quantitative easing) at €1.35T. A speech by the head of the ECB later this morning could add to exchange rate volatility.CAD
The Canadian dollar is stronger on overall US dollar weakness. The gains came despite oil prices resuming losses this morning after yesterday's rebound from 5 straight days of losses that saw oil fall 15%.ASIA/PACIFIC
FX Traders took profits in the Australian dollar and await the direction of global equities. The A-dollar has gained 25% since collapsing to 19-year lows in March. Recently, the sentiment around the Aussie dollar and other Asian currencies has swung around the direction of US equities. Recent weakness in technology shares in the US have global FX traders closely watching the US exchanges.
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