Safe-haven Buck Rises as World Crumbles

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Safe-haven Buck Rises as World Crumbles

The U.S. Dollar is trading in stronger ranges with calmer markets, but renewed fears over COVID-19 as Britain and other countries are once again asking people to stay and work from home.

Overview

The buck is most certainly back to playing the safe-haven role and rising in value all across the bard from fears that risk-appetite may have been too intense in the past few months as technology, the biggest earning sector, is experiencing a bit of a correction.

Geopolitically, there is not much for the world to hang on to that is positive and can incentivize investment as U.S./China relations worsen with demands over tech, Brexit looks like a potential break-up of the U.K. as well, and energy markets seem to not have clarity over future demand, most likely to improve at a snail-like pace.

Without any serious piece of data to chew other than Existing Home Sales numbers, we will keep a close ear to any announcements on stimulus as Federal Reserve Jerome Powell speaks to congress about how the economy has made some strides and what will be needed to sustain a recovery. Thus far, the buck is looking to reverse much of its losses from the end of August, the start of September.

What to Watch Today…

  • No major events scheduled for today

Complete Economic Calendar can be found here.

Read highlights from last week’s Currency event…

Currency Recap Image

EUR

The Euro has lost 2.0% of its value since September began, primarily as a result of it getting a bit hotter than desired per business leaders as well as monetary policy officials. European Central Bank President Christine Lagarde made some statements saying the ECB does not necessarily target the exchange rate but seemed to admit to how its strong run did not translate into inflationary growth. We doubt the ECB will intervene but expect further statements down the line to downplay the shared currency’s strengthening.

GBP

The Pound continues to dwindle as the situation in Britain has worsened based on more COVID-19 cases and worries over the economic future of the relationship with the EU as well as nations within the United Kingdom. Prime Minister Boris Johnson asked government employees to go back to working from home after a spike in cases.

Nevertheless, the PMs approach to the pandemic and negotiations over Brexit have soured his image in Scotland, where a clear majority voted to remain in the EU in 2016. A recent survey asking citizens if they would vote for Scotland to declare independence has support of 55.0% of respondents and 45.0% willing to stay, a total flip from when the survey was conducted six years ago.

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