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.”
September 23, 2020
EUR/USD 1.1688 GBP/USD 1.2744 USD/CAD 1.3336 AUD/USD 0.7109 USD/JPY 105.19 USD/CNH 6.8030 USD/ILS 3.4540 USD/MXN 22.0160 USD/CHF 0.9218 USD/INR 73.57
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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