Durable goods surge in July on auto production as dollar adds to overnight gains
The US dollar spiked higher vs. numerous currencies on 11% gain in Durable Goods orders. With just a few trading days left in the month, FX traders are quick to take profits by closing long trading positions in the euro, pound and emerging market currencies.
Tomorrow’s speech by Fed Chairman Jerome Powell has investors guessing bonds will sell off causing yields to rise.
“Business opportunities are like buses, there’s always another one coming.”
August 26, 2020
EUR/USD 1.1796 GBP/USD 1.3143 USD/CAD 1.3186 AUD/USD 0.7202 USD/JPY 106.33 USD/CNH 6.893 USD/ILS 3.4008 USD/MXN 21.9059 USD/CHF 0.9104 USD/INR 74.3
The dollar saw some strength overnight as speculators in the FX market closed short dollar positions in front of Fed Chair Powell’s speech tomorrow. The bullish move in the dollar accelerated when July Durable Goods orders came in at 11.2% vs. the forecast of 4.8%. Automobile manufacturers are playing catch-up after having been closed earlier in the year due to Covid. The July reading is the third straight monthly gain confirming a V-shaped manufacturing rebound.GBP
The pound is flat vs. the dollar after volatile trading overnight. Reports that Prime Minister Boris Johnson could retire in six months have been dismissed by UK officials. The Times newspaper made the claim citing a conversation with the father-in-law of Dominic Cummings, Johnson's chief adviser.EUR
The euro traded lower on overall dollar strength with little economic news out of Europe. Angela Merkel’s coalition government has formally extended job-preserving subsidies provided to businesses until the end of next year; the subsidies pay the bulk of paychecks.CAD
The Canadian dollar is flat this morning. Oil is slightly weaker as energy markets await the impact of hurricane Laura in the Gulf of Mexico. A speech later today by Bank of Canada Deputy Governor Carolyn Wilkins, will be watched for clues on future monetary policy framework.ASIA/PACIFIC
The Chinese renminbi fixing rate was set stronger again overnight by Chinese authorities. The onshore CNY is now almost 4% stronger vs. the dollar since the end of May and trades roughly at pre-Covid crisis levels.
The Indian rupee strengthened for a third day but is still 3.5% weaker than pre-Covid levels. Reserve Bank of India seems content to let the rupee strengthen for now.
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