U.S. Dollar Flows Mixed with Uneasy Markets

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U.S. Dollar Flows Mixed with Uneasy Markets

JULY 23, 2020

The U.S. Dollar is trading in mixed direction as major currencies remain elevated while commodity-based currencies tumbled.

Overview

This morning, we saw the release of Jobless Claims rise higher than expected by 1.4MM while Continuing Claims declined a bit. Overall, markets seem to be encouraged by recent earnings, but the buck has no clear guidance as the U.S. economy faces challenges from the pandemic. We are waiting to see any signal from U.S. lawmakers that they will be extending benefits or passing a new rescue package to ease financial woes. The comparison now against how other regions are performing is the ultimate factor in deciding the greenback’s chances for appreciation, which at the moment look bleak.

We are also witnessing the rise of gold influence certain fluctuations as hitting record prices translated into rises for Swiss Franc and Canadian Dollar. Putting faith in precious metals seems to have an effect of improving certain safe-havens and sources of stability such as Canadian assets.

On our side of things, New York Federal Reserve President William Dudley says the economic recovery is clearly flattening and there is much need for fiscal spending expanding much more than it has. We will see if anything else related to China will affect the buck in a negative way.

What to Watch Today…

  • No major events scheduled today

Complete Economic Calendar can be found here.

EUR

The Euro seems to be enjoying its current ranges as it has stopped threatening to sky-rocket higher. Yesterday’s session may have experienced the most activity related to profit-taking of Euro positions as the shared currency reached its highest value in over four years. Implementation is now key along with monitoring the consistency of economic indicators. Good news is that German Consumer Confidence is up in August measures of Business Confidence in France were also in great spirits for July.

GBP

Unlike Euro and other neighboring currencies, Sterling has lost ground-based on uncertainty over the country’s trade as well as economic future. While we have praised Chancellor of the Exchequer Rishi Sunak in his efforts to steer the U.K.’s financial recovery from the pandemic, lawmakers feel that Prime Minister Boris Johnson has not set out a clear plan of action for Brexit nor anything encouraging post-2020.

In fact, his administration admits a trade deal with the U.S. will not be agreed upon before November U.S. elections and observers do not see British negotiators getting any wins from Brexit talks. Additionally, a tougher stance on China regarding tech and Hong Kong, to alleviate U.S. pressures, is creating a rather uncomfortable position for business as well.

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