Risk-on sentiment hits dollar and other safe haven currencies on stimulus and UK/EU trade hopes
The dollar is weaker today against most currencies as financial markets embrace risk due to positive sentiment regarding an agreement for additional stimulus out of Washington DC. The UK and the European Union continue to discuss trade despite Boris Johnson suggesting negotiators stay home. China’s Q3 GDP was a positive 4.9% providing one of the few bright spots in the global economy and causing the renminbi to gain.
Tuesday: Housing Starts and Building Permits for September
Wednesday: Federal Reserve Beige Book
Thursday: Weekly Initial Jobless Claims, Existing Home Sales for September
Friday: Purchasing Managers Index for October
October 19, 2020
EUR/USD 1.1779 GBP/USD 1.2992 USD/CAD 1.3164 AUD/USD 0.7099 USD/JPY 105.38 USD/CNH 6.6771 USD/ILS 3.3835 USD/MXN 21.0892 USD/CHF 0.9100 USD/INR 73.3675
The dollar is losing ground this morning as are other safe havens on hope of more stimulus. Speculators, however, have cut bearish dollar positions over the past couple weeks as they prepare for election related volatility.GBP
The pound is stronger as the UK considers re-writing a controversial Internal Markets Bill proposed by Prime Minister Boris Johnson. The bill is considered illegal by the European Union as it violated prior Brexit agreements. Should the controversial parts of the Internal Markets Bill be removed, the UK and EU stand a better chance of reaching a new trade agreement before the December 31 deadline.EUR
The euro rose significantly despite a number of Euroland countries announcing new restrictions due to a spike in Covid cases. Hopes around a possible UK/EU trade deal helped the common currency as did overall risk-on sentiment.CAD
The Canadian dollar is marginally stronger vs. the greenback as oil price weakens. A weekly consumer confidence reading in Canada slipped reflecting concern over the necessity of additional Covid-related restrictions.ASIA/PACIFIC
The Chinese renminbi has rallied 7% since June vs. the US dollar and is now trading at the strongest levels since March 2019. Chinese third quarter GDP came in at 4.9% which was worse than expected but showed China as one of the few countries with economic growth.
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