With US equities stronger the dollar is being sold as financial markets close out volatile week
FX markets have been taking ques from equities all week with the dollar gaining as stock markets sold off. Safe haven buying has favored the euro though as uncertainty regarding the US election and impact of a second wave of coronavirus are priced into markets. The British pound has rebounded some today after falling 3.7% earlier this week. The Canadian dollar is steady after oil caused the loonie to lose ground earlier in the week.
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September 11, 2020
EUR/USD 1.1856 GBP/USD 1.2797 USD/CAD 1.3180 AUD/USD 0.7296 USD/JPY 106.16 USD/CNH 6.8343 USD/ILS 3.4657 USD/MXN 21.2504 USD/CHF 0.9084 USD/INR 73.5363
The dollar is weaker this morning as equities are expected to gain. August core CPI data came in slightly higher than expected at 1.7% year-over-year. With the Fed now saying they will tolerate higher inflation for longer, the markets will give little notice to inflation data unless it remains well above 2% for extended periods.GBP
The pound is stronger after falling significantly earlier in the week. The UK economy recovered 6.6% in July, having now regained about half the lost output since the Covid lockdown; however, the economy is still circa 12% smaller than it was in February. So, what’s next? There is growing pressure on the government to extend support schemes for industries to minimize the impact of further job losses.EUR
Euro strength has developed throughout this week, supported by comments yesterday from ECB President Largarde. The common currency is nearing a two-year high against the greenback, dampening inflationary concerns – but somewhat muting economic recovery for the European area. France is experiencing a worrying surge in Covid cases this week, seeing almost 10,000 new cases reported yesterday.CAD
The Canadian dollar is flat this morning after losses earlier in the week. The price of oil is slightly weaker as demand faces persistent concerns should a second wave of coronavirus hit.ASIA/PACIFIC
The Indian rupee is flat today and has regained roughly half of the 7% it lost to the US dollar since the initial shock of Covid back in March. With the oil price falling, some FX traders see the INR strengthening to 71 before year-end.
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