Daily Currency Update

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The Greenback bounces ahead of manufacturing data.

USD - United States Dollar

Greenback is in a bounce mode this morning. The U.S. dollar index is bouncing 0.32 percent and the Euro is falling 0.26 percent versus the Greenback. The reason is simple; the Pound is retracing (see Key Movers section below), one of the main catalysts for the U.S. dollar plummeting by the end of last week. Furthermore, the FX market mood has improved after China introduced measures to support an economy strained by the coronavirus outbreak.

The Greenback is increasing ahead of Markit U.S. Manufacturing PMI data (9:35 am EST), which showed a contraction last month, decreasing from 52.4 to 51.7 A further reduction might negatively impact the U.S. dollar, but an increase would make the Greenback to go even higher today.

Key Movers

The Euro is moderately falling this morning, driven by the Pound’s weakness. Despite ECB Vice President Luis de Guindos saying in Athens that risks for the Euro-area economy are, “...less tilted to the downside,” than they were only three-four months ago, Euro-area manufacturing released encouraging manufacturing data this morning, showing signs of recovery after unexpected economic contractions in France and Italy damped growth in the fourth quarter. Chris Williamson, an economist at IHS Markit said, “Green shoots of recovery are in sight...the improvement adds to our view that the euro-zone economy could see growth strengthen in the coming months”. The Markit Eurozone Manufacturing PMI (purchasing managers’ index) came in at 47.9 versus the expected number of 49.8.

The British Pound is falling 1.1 percent at this moment after Prime minister Boris Johnson showed a hard-line approach again to Brexit negotiations with Brussels. He will lay out his vision on Monday for a “Canada-style” free-trade deal, vowing to ensure that the UK will not be bound by any EU rules on social protections and the environment. Technically speaking, the GBP/USD has an important resistance at 1.3215, which was also the high during Friday's session.

China cut some borrowing costs and injected cash into the financial system to ensure ample liquidity as the their equity market fell strongly last night in their first session after the longer than expected break due to their Chinese New Year holidays and the outbreak of the Coronavirus. The Chinese central bank set its daily Yuan reference rate stronger than the key 7-per-dollar level as onshore markets resumed trading for the first time since Jan. 23rd.

Expected Ranges

USD/CAD: 1.3222 - 1.3265 ▼

EUR/USD: 1.1060 - 1.1113 ▲

GBP/USD: 1.3000 - 1.3095 ▼

AUD/USD: 0.6690 - 0.6727 ▲

NZD/USD: 0.6455 - 0.6497 ▲