U.S. Dollar Down Tackling Various Fronts
JULY 13, 2020
The U.S. Dollar is trading in mostly weaker ranges, in particular down to the Euro and other neighboring tender, which are being propelled by an improving economic situation and hopes of passing a major rescue package for the Euro-zone.
COVID-19’s uneven path of damage in the United States is sending mixed signals about regional recovery and doom as New York registered no deaths for the first time since the start of the pandemic while Arizona and Florida face hospital capacity concerns because of record daily infections. Meanwhile, stocks are up, but investors and traders worry there is aura of a bubble market about to pop. From many angles that include the coronavirus prevalence, Chinese relations, and a potential market bust, the buck looks like an unattractive asset at the moment.
Additionally, recent revelation of strong Industrial Production in China suggests that the country’s fundamentals are solid, COVID-19 is mostly behind, and projections for Gross Domestic Product in Q2 can be positive maybe as high as 3.4%. This in turn has helped the emerging markets and their currencies, with the MSCI Emerging Market Currency Index up by over 1.0% in the last three weeks.
Mexican Peso is one of the beneficiaries, despite now placing fourth as the country with the most deaths from the virus, surpassing Italy this weekend. We hope our hemisphere gets healthier and seeks once more a path to prosperity. Right now, other regions looking better off and their currencies values are evidence of it.
What to Watch Today…
- No major events scheduled today
Complete Economic Calendar can be found here.
The Euro has climbed by 5.0% in the last two months alone based on the reality that the other side of the Atlantic has controlled the contagion and managed a smoother return to business. Furthermore, bad times for the shared currency went away over the weekend as the U.S. decided to delay a proposed set of tariffs to be imposed on French goods in retaliation for a controversial tax to be levied on foreign tech companies.
An eventful week awaits Euro flows with the central bank announcing policy decisions Thursday while EU leaders prepare for a summit that begins mid-week and could mean the passing of the large aid package that has been in negotiation for over a month. Expect Euro to see volatility, but more likely further gains if announcements and deals go better than already expected.
The Canadian Dollar has also been a mover against the buck and could see potential for advancement on Wednesday as the Bank of Canada is set to meet. Also Wednesday, OPEC+ will have their meeting and will discuss the reduction or increase in production cuts moving forward. A tough early half of the year for CAD could turn around big time as the economy looks to rebound and global activity flourishes.