Pandemic news drives financial markets as economic data remains volatile
Covid concerns drove the dollar higher as financial markets remained focused on new daily records of coronavirus cases in the US. Economic data in Europe held steady helping the common currency. The pound weakened as lockdown measures are set to ease leading FX traders to speculate on a second wave of Covid in the UK. Canadian dollars are cheaper for a third day as the oil price recovery runs out of steam.
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June 26, 2020
EUR/USD 1.1219 GBP/USD 1.2364 USD/CAD 1.3677 AUD/USD 0.6869 USD/JPY 107.0900 USD/CNH 7.0782 USD/ILS 3.4310 USD/MXN 22.8784 USD/CHF 0.9478 USD/INR 75.6425
The dollar continues to gain as Covid concerns lead to safe haven dollar buying. After two months of significant losses, Personal Consumption grew 8% in May which was slightly less than expected. Overall, spending is significantly less than pre-pandemic. Income for May shrank 4% after a huge 10% increase in April. Government stimulus checks and added unemployment benefits have added volatility to economic data.GBP
The pound weakened vs. the US dollar and the euro as FX traders see the UK response to Covid as riskier than continental Europe. Reports emerged yesterday that major UK firms are now assuming that initially the UK will not have a trade deal in place with the European Union and are planning accordingly with measures such as stockpiling.EUR
The euro held steady vs. the US dollar after better than expected consumer confidence readings for June in France and Italy. Financial markets generally believe Europe has done a better job of managing Covid and may see a faster economic recovery. In an attempt to appease the US, France, UK, Italy and Spain have offered to limit the scope of a proposed global digital tax. The nations sent a letter to US Treasury Secretary Mnuchin stating that a phased approach would be taken.CADThe Canadian dollar headed toward a third day of losses vs. the US dollar as the price of oil seems to have topped out. New coronavirus cases in the US spooked oil traders again today sending the price of oil, and the loonie, lower.ASIA/PACIFIC
The Australian dollar has gained 20% vs. the US dollar since the lows of March, effectively retracing almost of the losses for the year. With China’s economy slowing and energy prices topping out, the A-dollar is vulnerable if a resurgence of Covid cases hits the global economy.
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