Weary markets limp toward the weekend

Peter Compton

July 24, 2020

China closes US consulate in Chengdu and investors question the pace to pre-covid economic levels

China’s renminbi weakened slightly after authorities told the US to close one of its less important consulates. The US dollar had a late day rally yesterday afternoon as equity markets began a sell-off. This morning the dollar is weak in volatile trading as markets wait to see if the US/China flare-up will subside or escalate. The euro continues to gain on the dollar and the British pound holds recent gains.

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FX Rates
July 24, 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.

EUR/USD 1.1600
GBP/USD 1.2756
USD/CAD 1.3431
AUD/USD 0.7080
USD/JPY 106.00
USD/CNH 7.0172
USD/ILS 3.4151
USD/MXN 22.4829
USD/CHF 0.9247
USD/INR 74.8288
USD
Bearish sentiment around the US dollar seems to be prevailing again in morning trading. However, the dollar's safe-haven status was on full display yesterday when it temporarily surged as equity markets tanked. The dollar is at a pivotal point as Covid concerns hamper the return to a full economy and US/China relations worsen.

July PMI data and June New Home Sales data due later this morning.

GBP
The British pound held onto gains despite stalled trade talks with the European Union. Retail sales for June surprised on the upside as did July PMI data.

EUR
The euro gained again this morning despite mixed PMI data. Germany was stronger than expected but French PMI for July missed estimates. FX traders seem to favor euro over the US dollar despite the dollar's traditional safe-haven status.
CAD
The Canadian dollar lost ground in morning trading after gaining almost 2% this week vs. the US dollar. Gold continued its march higher helping the loonie as did a stable oil price.

ASIA/PACIFIC
The Chinese renminbi weakened again after news of authorities closing a US consulate. China appears to be doing a better job of containing Covid relative to the US. With President Trump facing reelection in November investors are concerned he will continue to punish China as it remains a popular, bipartisan stance.

The Japanese yen strengthened as it's poised to break through the 106 level set in April.

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Contact your respective SVB FX Advisor or the SVB FX Advisory Team at fxadvisors@svb.com.
See all of SVB's latest FX information and commentary at www.svb.com/trends-insights/foreign-exchange-advisory

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Source: Bloomberg

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WRITTEN BY

Peter Compton

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