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The Greenback gets a boost as the U.S. government says Hong Kong is no longer politically autonomous from China.

USD - United States Dollar

The U.S. dollar index bounces by around 0.18 percent and the U.S. dollar increases by 0.05 percent versus the Euro as the U.S. says that Hong Kong is no longer politically autonomous from China. This move could have important consequences on the special trading status of the former British colony with the U.S.; Secretary of State Michael Pompeo said that, “...no reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China, given facts on the ground.” This situation is increasing the tension that has weighed down the Aussie dollar, Kiwi dollar, and Canadian dollar all week. The headlines in Hong Kong and Taiwan are beginning to positively affect the U.S. dollar, so it might prevail with its safe haven status.

Tomorrow, jobless claims should continue to trend down, but the pace of declines has been slow. There are some signs of small businesses rehiring as the economy gradually reopens.

Key Movers

European Union officials boosted the Euro against the U.S. dollar, but it was short lived. They are proposing a €725-billion Covid-19 relief fund, which is a fiscal stimulus package composed of loans and grants (and larger than the French-German proposal). There is still a lot of work ahead, as the plan needs the unanimous agreement of all 27 EU members. So far, Denmark, Sweden, Austria and the Netherlands don’t agree with the plan. ECB President Christine Lagarde previously warned that the EU Gross Domestic Product would fall by about 8 to 12 percent in 2020. If this plan were implemented, this fund would be massive and not only support the European recovery, but it would also demonstrate solidarity. This plan is called, “Next Generation EU,” and it is very ambitious because it plans to borrow €750bn from the markets with plans to repay within a three-decade window from 2028 to 2058 through the EU budget. The EU would pay it back by raising its own resources through taxing large corporations, emission trading schemes, and a carbon border adjustment mechanism.

Expected Ranges

USD/CAD: 1.3737 - 1.3851 ▲

EUR/USD: 1.0933 - 1.1000 ▼

GBP/USD: 1.2186 - 1.2295 ▼

AUD/USD: 0.6508 - 0.6614 ▼

NZD/USD: 0.6077 - 0.6192 ▼