Dollar falls as EU package approved
Tuesday 21 July, 2020
Daily Currency UpdateUSD - United States DollarThe US dollar touched a four-month low against the euro yesterday after European Union leaders agreed on a 750-billion recovery fund.The euro jumped above 1.1450 yesterday and continued its rise at the opening of trading today. EU leaders convened their four-day summit and agreed to distribute 390 billion of the 750 billion proposed recovery fund as grants to the worst hit member states while the remaining 360 billion will be parceled into low interest rate loans. The proposed agreement is a huge step forward in a united Europe and bolstered markets hopes the EU will continue to be proactive in tackling the problems raised by the COVID-19 crisis. Meanwhile back in the US, Democrats and Republicans continued debating a $1 trillion-dollar economic relief package. Further delays of the relief package may add to the safe-haven bids on the dollar.
Key MoversThe British pound staged a strong relief rally against the Euro, U.S. Dollar and other major currencies on Monday reversing some of last week’s sell-off. GBP/EUR rallied by 0.75% to push above the 1.10 handle. GBP/USD pushed higher by 0.5% to break through 1.26 and then trade towards 1.27. There were no obvious signs as to why Sterling rallied yesterday, more than likely it was repositioning in the markets before another round of Brexit negotiations this week.The Australian dollar crept back above 0.70 US cents through trade on Monday, buoyed by an uptick in risk appetite. Investors chased risk assets higher following reports further COVID-19 vaccine trials showed promising results. AstraZeneca, in partnership with Oxford University, released results of trials that covered over 1,000 patients all of whom generated antibodies to the virus as well as T-cells which seek out and kill already infected cells. With no serious side-effects reported researchers will move to the next stage of clinical trials, upsizing the number of participants in the hope of having a finished product ready for delivery to key healthcare workers and those most vulnerable to the disease by years end. Having pushed back through 0.70 the AUD touched intraday highs at 0.7020 before leveling out and trading sideways into this morning’s open.
- USD/CAD: 1.344 - 1.353 ▼
- USD/AUD: 1.405 - 1.427 ▼
- EUR/USD: 1.142 - 1.149 ▼