Daily Currency Update

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The recent U.S. dollar rally is put on pause after commodity currencies bounce strongly.

USD - United States Dollar

In the U.S., weekly jobless claims data eased from record highs this month, however they are still well above record highs. Even though the initial and continued filings for unemployment benefits were a bit below forecasters’ expectations this week, the numbers keep piling up, and millions of Americans are losing their jobs. According to Bloomberg, the unemployment rate could rise as high as 20 percent. Market participants already priced in this situation back in March, when the equity market fell strongly. However, at this moment, the equity market is bouncing strongly and it is driving the U.S. dollar lower versus commodity currencies. The U.S. dollar is falling 0.53, 0.82, and 1.05 percent versus the Loonie, Aussie dollar, and Kiwi dollar, respectively.

The U.S. dollar continued falling this morning when the U.S. Markit Manufacturing PMI slumped to 36.9 versus the 38 expected, which is much worse than expected. The Euro, which is another weak currency this morning, bounced a little against the Greenback after the release of American manufacturing data. The EUR/USD touched an intraday low of 1.0755 early and it is trading at 1.0793 at the time of this writing.

The Kansas City Fed’s business survey will be released at 11 am EST.

Key Movers

In Europe, the purchasing manager surveys hit new record lows, but the Euro is being helped by the ECB’s decision to lend more openly against junk collateral to support financial markets and control panic. European Central Bank President Christine Lagarde has just told the EU’s leaders that the bloc’s gross domestic product could fall by as much as 15 percent and that they’ve done too little, too late. Lagarde spoke during a video conference meeting with the 27 European Union leaders on how to mitigate the economic fallout of the global pandemic. However, at the time of this writing, the Euro is falling against the Canadian dollar by 0.71 percent, and it has just turned around versus the U.S. dollar, increasing 0.1 percent.

Crude oil (June WTI futures contract) rises following reports of Kuwait cutting output. The number of coronavirus cases in Canada rose 5.5 percent of Wednesday; however, the Canadian dollar is trading higher following the continued recovery of crude oil prices.

Expected Ranges

USD/CAD: 1.3972 - 1.4077 ▼

EUR/USD: 1.0807 - 1.0875 ▲

GBP/USD: 1.2345 - 1.2495 ▲

AUD/USD: 0.6369 - 0.6445 ▲

NZD/USD: 0.5995 - 0.6079 ▲