Buck Dwindles, Cannot Keep Winning Streak

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Buck Dwindles, Cannot Keep Winning Streak

SEPTEMBER 28, 2020

The U.S. Dollar is starting the week off on the weakening side following a week in which it reached its best levels overall since April.

Overview

Overnight, the European trading session gave the impression that companies are actually doing better than previously thought and after evidence of downward-looking Purchasing Managers Index figures that came along with an uptick in infections, most since June. Some investors and banks are even saying that it is hard for them to be too pessimistic about the prospects of 2021 that will see the fruits of the help that has been implemented via rescue spending as well as lower borrowing costs all around.

Today is also when negotiators from the U.K. and the EU engage in their last round of talks for a Brexit trade deal, which has more positivity behind it as recent statements demonstrate hope certain disagreements have been overcome behind closed doors. More volatility officially comes tomorrow with the first U.S. Presidential debate. We will also get PMIs for China on Wednesday that could change sentiment from good to bad rather quickly.

What to Watch Today…

  • No major events scheduled for today

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EUR

The Euro is mounting a return to gains following a week of doubts and return to fears that COVID-19 will force nations to rule another lockdown. Although data and the overall status of the Euro-bloc came into question, the revival in European stocks indicates that risk-appetite will not go away despite many risk items unresolved. Christine Lagarde, head of the ECB, is doing much of the same work this week as her American counterpart Jerome Pell in asking leaders for a strong commitment to fiscal ways to incentivize the economy and to complement the policies by the monetary authorities.

GBP

The Pound surged dramatically as today’s big even in talks could set the U.K. and Sterling on a path of growth. More than enough has been written about the cons of a no-deal scenario, but now as we are just three months from the deadline, it looks as if there is hope an actual pact for post-Brexit dealing will be achieved. Furthermore, Pound solidified its rise with statements from Bank of England officials that while negative rates are being studied, they will not be implemented as a policy tool.

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