Optimism around plasma-based therapies sent the dollar toward the two-year lows set earlier this month.
Risk-on sentiment prevails to begin the week as investors focus on news reports that the FDA will expand access to therapies involving blood plasma from patients who have recovered from the coronavirus. The euro bounces off a key resistance level and may push higher on overall dollar weakness.
Monday: Republican Convention begins
Tuesday: New home sales and price data
Wednesday: Durable Goods
Thursday: Fed Chair Jerome Powell speaks during annual “Jackson Hole” event. Initial Jobless Claims
Friday: Personal Spending and PCE Deflator for July and Univ. of Michigan Consumer Confidence data for August
August 24, 2020
EUR/USD 1.1831 GBP/USD 1.3104 USD/CAD 1.3176 AUD/USD 0.7187 USD/JPY 105.81 USD/CNH 6.9129 USD/ILS 3.4010 USD/MXN 21.9366 USD/CHF 0.9092 USD/INR 74.32
The US dollar sold off as risk-on sentiment lifted equities and other risk assets. The Federal Reserve will be hosting the annual Economic Policy Symposium this week - typically referred to as their Jackson Hole event. Fed Chair Jerome Powell speaks on Thursday and markets will be watching carefully for a signal to how the Fed may change their inflation targeting.GBP
The pound gained vs. the US dollar despite concerns trade discussions with the EU will not lead to a new trade agreement before the year-end deadline.EUR
Last Friday, the euro dipped below the 1.18 resistance level and quickly recovered in early trading this morning. Overall dollar bearishness favors the euro with some FX traders seeing the currency push up toward 1.20.CAD
The Canadian dollar is stronger today on general US dollar weakness. Also, the price of oil is 1% higher due to the threat of two hurricanes headed toward the Gulf of Mexico. Oil production from offshore wells has been reduced by over 50% as a precaution.ASIA/PACIFIC
The Japanese yen is flat in morning trading despite risk-on sentiment. FX markets are now distinguishing between overall risk sentiment and bearish US dollar speculation. The upcoming presidential election, Covid response and race riots in the US are highlighting the unique US position which could see the US underperform Asia.
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
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