Dollar steady, markets consolidating
The US dollar is steady and trading against most peer currencies in a narrow trading range. The US economic calendar is light today. A sell-off in European equities, and at the open in the US, may represent investors taking short-term profits following July’s rally. Interest rates are basically unmoved across the globe. News of the Trump administration considering ways to destabilize the Hong Kong dollar to punish China had little impact on Chinese or HK equity markets nor the Chinese yuan or Hong Kong dollar. Mexican President AMLO is in Washington today to sign the NAFTA 2 trade agreement. Gold is trading above $1,800 per oz. for the first time since 2011.
July 8, 2020
EUR/USD 1.1324 GBP/USD 1.2574 USD/CAD 1.3556 AUD/USD 0.6968 USD/JPY 107.51 USD/CNH 7.0085 USD/ILS 3.4462 USD/MXN 22.7163 USD/CHF 0.9391 USD/INR 75.0212
The dollar is little changed overnight, as trading in financial markets consolidate. Asian equities made small gains, European equities small losses. The Mexican peso is the top performing currency overnight, as Mexico’s President Andres Manuel Lopez Obrador meets with Trump to sign the new trade agreement.GBP
The pound is steady, as traders await Chancellor of the Exchequer Sunak’s unveiling of a new stimulus program. The focus will be on the paying of wages of young workers, green initiatives and job support, primarily with training and outplacement services.EUR
The euro is unchanged overnight, and is trading just over $1.1300. Traders are starting to focus on next week’s European Central Bank meeting, although little change is expected. There are no key eurozone economic data releases this week.CAD
The Canadian dollar is trading under 1.36, with little apparent reaction in the markets to PM Justin Trudeau’s decision not to attend the US/Mexico/Canada celebratory trade deal event in Washington today. Traders are focusing on Wednesday, when Canada’s finance minister provides a fiscal update and on Friday, when June employment data for Canada is released. The Bloomberg survey is for a +500k increase in employment following +290k in May.ASIA/PACIFIC
News hit the market that the Trump administration had considered proposals to destabilize the longstanding Hong Kong dollar peg to the US dollar. The practical difficulties in achieving it and the significant potential damage to US interests has traders effectively ignoring the news. Asian equities are higher and the Hong Kong dollar and Chinese yuan are steady.
For more analysis on FX markets or information regarding SVB's FX services:
See all of SVB's latest FX information and commentary at www.svb.com/trends-insights/foreign-exchange-advisory