Probability of second wave of Covid supports dollar while economic data shows weakness

The dollar heads for more gains today as speculators continue to head toward safe haven investments and currencies. Economic data in Europe came in weaker than expected and the UK indicates less government support for furloughed workers. China sets renminbi lower again today to staunch its currency's quarterly gains. The yen touches 104 before profit taking sets in.

“Forever is composed of now’s.”

Emily Dickinson
  • FX Rates
    September 23, 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 is stronger again today as fear of Covid's impact on global economies continued to push investors into the safe haven dollar. 

    Various members of the Federal Reserve continue speaking engagements and news show appearances to explain the subtleties of the Fed's new inflation guidance. Questions continually arise surrounding the Feds ability to do much more and their capacity to help spur economic growth.

    September PMI data is released later this morning.

    GBP

    The pound briefly dropped below 1.27 before bouncing back and is now flat.

    Prime Minister Boris Johnson addressed the House of Commons yesterday and again today regarding his country's measures to combat Covid. This morning, Johnson made clear his opposition to extending the government sponsored furlough program. In a surprise to many, he also said he expects lockdown measures will be needed for another 6 months.

    September Composite PMI data came in slightly worse than expected at 55.7.

    EUR

    The euro trades around 1.17 and is now headed lower as Eurozone Composite PMI for September came in at 50.1 which was worse than the 51.9 expected.  The euro is down 2.5% in September vs. the US dollar.

    As Covid 19 cases grow, the EU leaders’ summit has been postponed due to EU Council President, Charles Michel, having to go into quarantine.

    CAD

    The Canadian dollar traded through 1.33 on overall dollar strength. Financial markets in Canada await Prime Minister Trudeau's speech later today on his government’s response to Covid and future legislative agenda.

    Oil is flat today as global suppliers acknowledge demand will remain weak even if supplies have shown great discipline.

    ASIA/PACIFIC

    The Japanese yen weakened after briefly touching 104. New Prime Minister Suga met with Bank of Japan Governor Kuroda to reaffirm a 2013 joint statement designed to support the economy and show solidarity.

    China again sets daily FX fixing weaker indicating authorities want to slow the renminbi’s gains which have sent the currency up 4% over a basket of currencies in Q3.

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Peter Compton
WRITTEN BY
Peter Compton

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