What should have been never was
Monday 17 August, 2020
Daily Currency UpdateUSD - United States DollarChina-US trade relations were resolved, and the US government passed an economic stimulus plan that pushed the US dollar to record highs. That should have been the storyline for the last three weeks.Instead, trade tensions continued to simmer this weekend and COVID-19 cases continued to rise. As a result, the US dollar’s value continued to slide.The Bloomberg Dollar Spot Index fell 0.3% and the euro gained further traction. For the third Monday in a row, the US dollar opened lower against the Canadian dollar. USD/CAD opened the week down 1.3%. The news for the US won’t be pleasant until COVID-19 cases dramatically decrease and consumers demonstrate a willingness to return to a life not dampened by coronavirus restrictions. Until then, the rapid rebound many expected will not arrive as policy makers enter a more difficult phase.
Key MoversLooking ahead to this week, the UK and the European Union start their sixth round of trade talks in Brussels tomorrow. The talks are set to last until the end of the week. Irish Prime Minister Michael Martin stated last week that a post-Brexit deal can be struck after talks with his UK counterpart. He also said that a failure to reach an agreement would harm economies across Europe and UK in the wake of the coronavirus crisis. Hopefully these comments ring true and further positive rhetoric comes out of this week’s talks. If so, sterling could gain back more ground against the US dollar.Concerns over a second wave of COVID-19 in Europe saw European equity markets retreat nearly 2% on Friday and lead to the UK introducing further quarantine measures on holiday makers returning from Europe. All eyes will now be on European PMI and consumer confidence data due on Friday.
- EUR/USD: 1.183 - 1.188 ▼
- GBP/USD: 1.30 - 1.311 ▼
- AUD/USD: 0.716 - 0.722 ▼
- USD/CAD: 1.32 - 1.326 ▼