The dollar gained 1.3% versus a basket of currencies last week but is beginning this week on much weaker footing. Some investors feel the fall in risk assets has gone too far and used the news of zero new Covid cases in China to buy equities and sell the dollar. The Fed’s annual Jackson Hole symposium culminates Friday with Chairman Powell speaking and investors listening for any change in Fed sentiment regarding monetary policy.
US Economic Data this Week:
Tuesday: New Home Sales for July
Wednesday: Durable Goods Orders for July
Thursday: Initial Jobless Claims
Friday: PCE Deflator for July, Retail Inventories for July, Personal Spending for July, Univ. of Michigan Consumer Sentiment for August. The Fed’s Chairman Powell speaks at virtual Jackson Hole event
August 23, 2021
EUR/USD 1.1742 GBP/USD 1.3701 USD/CAD 1.2720 AUD/USD 0.7193 USD/JPY 109.82 USD/CNH 6.4817 USD/ILS 3.2284 USD/MXN 20.3846 USD/CHF 0.9140 USD/INR 74.2112 USD/BRL 5.3814 USD/SGD 1.3576 USD/DKK 6.3336 USD/SEK 8.7336 USD/NOK 8.9315
After rallying last week, the USD retreated this morning as the risk-off tone gave way to bottom-fishing. Market’s will be paying close attention to Jerome Powell’s speech on the economic outlook at the virtual Jackson Hole event on Friday.GBP
The pound rallied strongly this morning briefly touching 1.37. GBP/USD trades down 1.5% since the start of last week, reaching lows of 1.3602 on Friday. Jitters over global growth sparked a broad selloff last week and the pound is leading markets higher against the dollar.EUR
EUR/USD gained this morning after a week of losses. The euro dipped 0.82% last week and briefly fell below the psychologically important 1.17 level. Since September last year the euro has rallied strongly after falling below 1.17.CADThe Canadian dollar is rallying strongly following the price of oil higher. After last week's rout in the price of oil (-9%) bottom-fishing is leading to a 3% increase this morning. Commodity currencies in general are outperforming today on speculation the Fed may delay the start of tapering due to the Delta variant impact on economic growth.ASIA/PACIFIC
The Chinese renminbi gained after China reported zero new Covid cases overnight helping some investors to look beyond the delta variant's surge in cases in some countries.
The New Zealand dollar gained despite the country extending its lockdown to August 27.
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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