Dollar Flat Overnight But Enjoying Early Rally After Durable Goods

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Dollar Flat Overnight But Enjoying Early Rally After Durable Goods

AUGUST 26, 2020

Across asset classes, markets were relatively quiet overnight causing the greenback to float in familiar ranges. 

Overview

Some analysts have pointed to month-end-flows (dollar negative) offsetting some demand for the dollar as a haven, but we are not sold on that argument.

Perhaps this morning’s economic data will give traders a reason to push the greenback in a more definitive direction.  U.S. Durable good have impressed, again.  Orders in July rose 11.2%, smashing estimates of a 4.8% increase.  June’s print was also upwardly revised, according to the Census Bureau.  The greenback appears to be enjoying a lift after the data, with the dollar gaining about a quarter percent in the moments following the release.

Attention will likely then shift tomorrow’s much-anticipated speech Federal Reserve Chairman Jerome Powell.  While the Fed has essentially assured markets that rates will not rise for the better part of two years, market participants are looking for comments on the central bank’s review of their monetary framework.  Powell is also expected to discuss a new strategy towards inflation.  Expect heightened volatility during his speech, which is slated for 9:10 EST tomorrow.

What to Watch Today…

  • No major events scheduled for today

Complete Economic Calendar can be found here.

EUR

EUR/USD is another G10 pair that is stuck in a holding pattern ahead of the Jackson Hole symposium tomorrow.  The Euro is experiencing a light sell-off in early New York trading, however.

German equities broke modestly higher after Europe’s largest economy extended a program that has kept millions of people for losing their job.  The program’s extension will cost around 10 billion euros and run until the end of next year.

GBP

The British pound made strong strides against the U.S. dollar during yesterday’s session and held on to most of those gains overnight.  However, recent sterling rallies up to near Year-to-date highs have been met with plenty of selling resistance, indicating the currency’s impressive run might have run out of steam.

This may become especially true as we get closer to the October 15th deadline for the European Union and the United Kingdom to come to terms with a Post-Brexit relationship.

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