Improving global growth outlook and easy money from Fed encourage weaker dollar

Improving global growth outlook and easy money from Fed encourage weaker dollar

The dollar is weaker again this morning as investors continue to see global economies growing in 2021 once a vaccine becomes widely available. Central banks are expected to keep monetary policy very accommodative for a longer period to be certain economies are fully back to growth. Uncertainty around the US presidential election has passed causing safe-haven currencies to continue to lose ground. The dollar could very likely extend losses well into 2021.

Economic Data for this Week:

Tuesday: Markit Manufacturing PMI and ISM for November

Wednesday: ADP private payroll data for November. Release of Fed Beige Book

Thursday: Initial Jobless Claims, Market Services PMI and ISM for November

Friday: Nonfarm Payrolls data for November, Trade Balance, Durable Goods and Factory Orders for October

  • FX Rates
    November 30, 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.


  • USD

    The dollar has lost 2.8% versus a basket of currencies since the start of November. Speculators continue to make bets against the US dollar relative to nearly every currency. Even fellow safe-haven currencies, the Swiss franc and Japanese yen, continued to gain versus the greenback. President-elect Biden has been choosing cabinet posts that investors see as positive and more consistent than pre-Trump appointments.

    GBP

    The pound strengthened relative to the US dollar and is up 3.35% in November. The UK looks set to begin distributing vaccines before year end. A trade deal with the European Union could be announced before the end of this week.

    EUR

    The euro is set to end the month 3% stronger versus the US dollar. The EUR/USD rate is now close to 1.20 which is a level many see as a point where the European Central Bank will take notice and begin to try and talk down the common currency. German inflation data for November came in at a worse than expected -0.7%.

    CAD

    The Canadian dollar traded below 1.30 and is now at the strongest level in over two years. Prime Minister Trudeau plans to increase spending to combat the effects of Covid and help the economy grow.

    ASIA/PACIFIC

    The Chinese renminbi, which is almost 2% stronger in November versus the dollar, weakened despite strong economic data showing widespread growth throughout China. China asked the US to drop an investigation which accuses China of undervaluing the renminbi by 5% in 2019 thereby helping exporters. 

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See all of SVB's latest FX information and commentary at www.svb.com/trends-insights/foreign-exchange-advisory

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Peter Compton
WRITTEN BY
Peter Compton

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