Positive economic data outweighs politics
Thursday 1 October, 2020
Daily Currency UpdateUSD - United States DollarEconomic activity in the US manufacturing sector grew in September, with the overall economy notching a fifth consecutive month of growth, say the nation's supply executives in a monthly index of purchasing managers.The Purchasing Managers Index (PMI), a leading indicator of economic health, notched 55.4 and beat expectations. Anything above 50 indicates economic expansion. Businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company's view of the economy.The positive economic news may have dampened the potential for an agreement on a fiscal stimulus by the US government. Speaker Nancy Pelosi has corralled her democratic votes. The Republicans, seeking to minimize government spending, have not been able to secure enough votes to pass the measure.The US Dollar Index, which reached a five-week high on September 25, continued to decline. As the index declines, other currencies are in greater demand. The index, which measures a basket of currencies against the dollar, was at 93.86 at the time of writing.
Key MoversBrexit news reared its head again. Reports this morning that negotiations have broken down once again, this time of state aid rules, weighed on the pound. European Union President Ursula von der Leyen announced that legal proceedings against the UK over the Internal Market Bill have been finalized and will be submitted.US equities were bolstered by stronger than expected economic data out of the US, coupled with increased hopes that US lawmakers would soon agree to a long-awaited fiscal stimulus package. This positive sentiment drove markets and supported global equities. Demand for commodity currencies, such as the AUD and NZD, increased. Despite the NZD also rising from 0.6570 to 0.6625, the AUD/NZD cross managed to rise 50 points to 1.0850.
- EUR/USD: 1.171 - 1.176 ▼
- GBP/USD: 1.282 - 1.297 ▼
- AUD/USD: 0.715 - 0.720 ▼
- USD/CAD: 1.328 - 1.332 ▼