Dollar weaker on hope for US stimulus package

Peter Compton

October 19, 2020

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

FX Rates
October 19, 2020

Rates are not real time. Rates are today's indicative mid-market rates as of time of publishing, which may vary. Please contact SVB for a current quote.

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
USD
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.

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Source: Bloomberg

This article is intended for U.S. audiences only.

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WRITTEN BY

Peter Compton

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