US dollar hits 18 month low as Gold soars
The dollar drops to January 2019 levels and is on track for the worse month in a decade as high rates of COVID infections dampen economic recovery. Investors have sold the US dollar in favor of currencies where the pandemic has been more contained.
Monday: GE IFO Business Climate, US Durable Goods
Wednesday: MBA Mortgage Applications, FOMC rate decision
Thursday: US Jobless Claims, Japan Industrial Production
July 27, 2020
EUR/USD 1.1741 GBP/USD 1.2853 USD/CAD 1.3394 AUD/USD 0.7133 USD/JPY 105.40 USD/CNH 7.00 USD/ILS 3.42 USD/MXN 22.11 USD/CHF 0.9225 USD/INR 74.84
The greenback hit an 18-month low falling 0.9% to its lowest level since January of 2019 ahead of the Federal Reserve policy meeting. Today, Senate Majority leader Mitch McConnel is expected to unveil the Republican stimulus plan containing $1T in support for the US economy. The plan aims are to extend unemployment benefits, another round of stimulus checks and increased funds for schools and testing.GBP
The pound is benefiting from US dollar weakness and is up half a percent versus the greenback to start the week. Pound bulls shrug off fears of a stalemate between the UK and EU and a no-deal before the PM’s July deadline.EUR
The euro climbed for a seventh session straight to the 1.1764 level breaching a 6-year descending trendline. The Sept 2018 1.1815 level is the next technical target.CAD
The Canadian dollar is also up versus its US counterpart on broad US dollar selling and an uptick in gold and oil prices.ASIA/PACIFIC
USDJPY fell 0.8% to 105.25 as stops and barriers were triggered.
The onshore yuan gained for the first time in four days as the dollar dropped. Trade tensions between the US and China flared again as the US consulate in Chengdu shut down in compliance with a retaliatory measure after Washington closed the Chinese consulate in Houston.
For more analysis on FX markets or information regarding SVB's FX services:
See all of SVB's latest FX information and commentary at www.svb.com/trends-insights/foreign-exchange-advisory
By providing your email address and clicking on the Subscribe button below, you consent to receive emails from Silicon Valley Bank for your chosen categories. You also consent to the terms of our Privacy Notice. If you have privacy questions, you may contact us at PrivacyOffice@svb.com. You can withdraw your consent at any time.
Thank you for subscribing to SVB's Daily FX Update.
You're almost done. Please check your email box and follow the instructions to confirm your subscription. If you did not receive an email please check your Spam or Bulk E-Mail folder just in case the confirmation email got delivered there instead of your inbox. If so, select the confirmation message and mark it Not Spam, which should allow future messages to get through. Please add us to your trusted list of senders, contacts or address book.
Please note that we will continue to send you communications that we need to send you (for example, to keep you updated on operational changes to your account, a product or a service) or that we are required to send you by law.
This article is intended for U.S. audiences only.
©2021 SVB Financial Group. All rights reserved. Silicon Valley Bank is a member of the FDIC and the Federal Reserve System. Silicon Valley Bank is the California bank subsidiary of SVB Financial Group (Nasdaq: SIVB). SVB, SVB FINANCIAL GROUP, SILICON VALLEY BANK, MAKE NEXT HAPPEN NOW and the chevron device are trademarks of SVB Financial Group, used under license.
The views expressed in this email are solely those of the author and do not reflect the views of SVB Financial Group, or Silicon Valley Bank, or any of its affiliates. This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part upon information from third-party sources that we believe to be reliable, but which has not been independently verified by us and, as such, we do not represent that the information is accurate or complete. The information should not be viewed as tax, investment, legal or other advice nor is it to be relied on in making an investment or other decisions. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to the material should be construed as a solicitation or offer, or recommendation, to acquire or dispose of any investment or to engage in any other transaction.
Foreign exchange transactions can be highly risky, and losses may occur in short periods of time if there is an adverse movement of exchange rates. Exchange rates can be highly volatile and are impacted by numerous economic, political and social factors, as well as supply and demand and governmental intervention, control and adjustments. Investments in financial instruments carry significant risk, including the possible loss of the principal amount invested. Before entering any foreign exchange transaction, you should obtain advice from your own tax, financial, legal and other advisors, and only make investment decisions on the basis of your own objectives, experience and resources.