Dollar Halts Decline; Sterling Pops Higher

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Dollar Halts Decline; Sterling Pops Higher

After taking steep losses yesterday, the greenback was able to recoup a touch overnight. The dollar remains near a two-year low, however.

Overview

The optimism we spoke of yesterday regarding Washington’s progress on agreeing to a virus aid package this week has waned with the two sides seemingly still far apart.  Majority Leader Mitch McConnel announced the Senate will stay in session next week instead of beginning their August break. As a result, equity futures show American shares will give back yesterday’s gains at the open.

This morning’s data finally showed some positive news on the labor front.  Initial jobless claims registered at 1.186M last week, better than the 1.4M expected by economists.  While historically awful, the print is the lowest initial jobless claims weekly number since the beginning of pandemic.  Continuing claims are 16M, in line with expectations.

Tomorrow’s Non-farm payrolls print promises to be a blockbuster with estimates ranging from plus three million jobs added to 600K jobs lost in July.

What to Watch Today…

  • Fed’s Kaplan speaks at 10 a.m.

Complete Economic Calendar can be found here.

EUR

The Euro pushed to a fresh two-year high against the U.S. dollar yesterday afternoon and made another run to break higher overnight.  Ultimately, the common currency starts the day slightly weaker versus its American counterpart.  The economic docket showed promising signs as Germany factory orders beat forecasts.  However, COVID headlines threw cold water on the optimism.  Germany, Europe’s largest economy, reported its highest number of new cases in three months.

AUD

The pound jumped higher against the U.S. dollar and the Euro following the Bank of England monetary policy meeting.  While the BoE kept rates on hold, BOE governor Baily said there is an “awful lot of risk” to the downside in their forecasts. Despite the gloomy outlook, the sterling found some strength as policymakers again expressed their aversion to negative interest rates.  The Monetary Policy Committee said the U.K. economy is unlikely to recover until the end of next year.

GBP/USD is trading near a 5-month high.

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