Dollar stronger as markets await Fed
The Fed begins a two-day symposium today with financial markets expecting central bankers’ comments to include slower post-pandemic economic activity due to Delta variant hotspots in the US and around the world. The dollar is strengthening as the Fed’s easy money policies are therefore likely to remain in place longer.
“With the new day comes new strength and new thoughts.”
August 26, 2021
EUR/USD 1.1752 GBP/USD 1.3718 USD/CAD 1.2624 AUD/USD 0.7250 USD/JPY 110.21 USD/CNH 6.4809 USD/ILS 3.2260 USD/MXN 20.3362 USD/CHF 0.9190 USD/INR 74.2238 USD/BRL 5.2422 USD/SGD 1.3538 USD/DKK 6.3276 USD/SEK 8.7152 USD/NOK 8.8168
The Bloomberg Dollar Spot Index has ticked up as focus shifts to Jerome Powell’s speech tomorrow at the Jackson Hole Symposium. Markets are anticipating a change in content in tomorrow’s speech as the surge in the Delta variant risks the global recovery.
This week’s Initial Jobless Claims (353K) and Continuing Claims (2,862K) were both higher than expected supporting the argument that the US economic recovery will be slower than expected.GBP
GBP/USD has dropped back below 1.3750 despite gaining some ground yesterday as risk-off sentiment returns to the market and fresh Brexit concerns hit UK retailers. Retailers are flagging a shortage of drivers to get goods to stores in time for the crucial Christmas buying season.EUR
EUR/USD bounced off a key level of support around 1.1729 yesterday. The euro is stronger this morning in volatile trading ahead of the two-day Fed symposium.
Business confidence in Germany has fallen for a second consecutive month, as concerns mount over potential supply bottlenecks caused by the resurgence of Covid cases. Business expectations in particular for the next six months dropped to a six-month low. Consumer confidence also failed to meet expectations to print at -1.2 this morning.CAD
The Canadian dollar lost ground vs. the US dollar as markets await the Fed. Oil prices have dropped after their biggest 3-day rally since March, as rising Covid cases dampen the outlook for demand. WTI trades around $68 a barrel.ASIA/PACIFIC
China’s central bank set its daily USD/CNY rate fixing a tiny bit weaker despite market expectations of a larger devaluation of the renminbi. FX traders are awaiting the speeches during the Fed’s Jackson Hole symposium.
India recorded the highest daily tally of Covid cases in more than a month. Also, the outbreak in Sydney has worsened, with new daily infections in the New South Wales state passing 1,000 for the first time.
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