Concerns over Covid, US election and now illegal bank activity send investors to the sidelines
Despite improvements in care for Covid patients, the increasing number of new cases, especially in Europe, causes financial markets to sell risky assets and buy safe havens such as Treasuries, the US dollar and Japanese yen. The death of US Supreme Court Justice Ginsburg again focused markets on the importance of the US election in November. A team of journalists reported several global banks engaged in illegal money transfers after they were heavily fined for the same offenses.
Tuesday: Existing Home Sales for August
Wednesday: Purchasing Managers Index for September
Thursday: Weekly Jobless Claims, August New Home Sales
Friday: Durable Goods Orders for August
September 21, 2020
EUR/USD 1.1770 GBP/USD 1.2839 USD/CAD 1.3256 AUD/USD 0.7243 USD/JPY 104.17 USD/CNH 6.7987 USD/ILS 3.4469 USD/MXN 21.5173 USD/CHF 0.9140 USD/INR 73.40
The dollar gained versus most currencies except the Japanese yen as global investors sought safe haven currencies. A combination of risk factors is resulting in a continuation of the equity sell-off which began at the start of the month. Underlying uncertainty regarding the US election and concerns the results could be contested are causing investors to pull back from any risk assets helping the US dollar and US Treasury securities.GBP
The British pound weakened on concerns that rising Covid cases may lead to renewed lockdown measures. Additionally, the International Consortium of Investigative Journalists released a report detailing decades of malicious transactions by global banks such as HSBC. The news added to an already weak equity market in Europe.EUR
The euro weakened this morning on concerns over increasing Covid cases. Although medical care and early testing have reduced fatalities, concerns that additional lockdown measures could lead to reduced economic activity caused a sell-off in equities. Adding to the weakness was a report implicating Deutsche Bank as one of the largest culprits in decades of illegal payments.CAD
The Canadian dollar headed toward its weakest levels in a month on overall risk-off trading. The price of oil is also 2% weaker this morning and is poised to fall below $40/bbl.ASIA/PACIFIC
The Japanese yen headed for an 8th straight day of gains vs. the US dollar and most every currency as FX traders seek safe alternatives. The yen is now trading at levels last seen during the depths of the initial Covid panic in March.
The Chinese renminbi weakened for a third consecutive day on overall risk-off trading. Still, the renminbi is up 3.4% vs. the dollar in Q3.
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