Dollar Set for 5th Monthly Decline; Euro at Two-Year High

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Dollar Set for 5th Monthly Decline; Euro at Two-Year High

AUGUST 31, 2020

The U.S. dollar is under pressure again to start the week after taking a beating last week.

Overview

A global rally in equities has further decreased demand for the safe-haven greenback.  American futures show that shares will rise again today after setting record highs on Friday.  Indeed, the S&P closed at an all-time high for the sixth consecutive trading day.

The U.S. dollar index is on track to close the month down 1.5% after falling 3% in July.  The dollar has fallen for five consecutive months.

Later this morning, the August Dallas Fed manufacturing print is due out.  Also, Fed Vice Chair Richard Clarida and Atlanta Fed President Raphael Bostic will speak for the first time since Fed Chairman Jay Powell announced a new monetary framework for the central bank last week.

The rest of the week’s data agenda is full of big prints, including ISM manufacturing tomorrow.  The largest risk event will be Friday’s Non-farm payroll for the month of August.  Predictions vary greatly but expect the numbers to show that the economy continues to rebound from the virus lows of the early summer.

What to Watch Today…

  • Dallas Fed Manufacturing at 10:30 a.m.

Complete Economic Calendar can be found here.

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EUR

The Euro popped higher again overnight and touched fresh-two-year highs against the U.S. dollar.  German inflation data showed a slight contraction in price pressures that were lower than estimates. However, the print has not dented the Euro’s strength.

Later this week, the Eurozone will report manufacturing and inflation data.

The U.K. is closed today for the summer bank holiday.

CAD

Commodity based currencies were also able to take advantage of the weak U.S. dollar, led by a surge in the Norwegian krone.  Norwegian is currently up a percent versus the beleaguered buck.

The Canadian dollar is also stronger this morning, representing five consecutive days of gains. If the move holds, it will be the longest winning streak for the “loonie” in eight months. West Texas Intermediate (WTI) is trading over a percent stronger this morning, allowing petro-currencies to find strength.

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