Daily Currency Update

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Risk and uncertainty hinder markets

USD - United States Dollar

While record levels of fiscal and monetary policy support have helped foster a positive risk backdrop, the uptick in COVID-19 cases and added geopolitical uncertainty are weighing on upward risk-on moves in the currency markets.

The S&P 500 drifted lower as risk appetite faltered following a surge in coronavirus cases and a Supreme Court ruling that will allow prosecutors access to President Donald Trump’s financial records.

While the Supreme Court ruling adds further political uncertainty, the surge in new coronavirus infections is more immediately concerning. 60,000 new cases were reported on Wednesday with over 900 fatalities recorded, the biggest daily death rate since early June. With COVID-19 spreading across the US, hopes of a full-scale re-opening are rapidly fading as states and governors rush to re-impose social distancing restrictions in a bid to contain the spread and ease the burden on the healthcare system.

The dollar index is down three tenths of a percent from yesterday’s close. The euro, pound, Australian dollar and Canadian dollar are all up this morning against the dollar.

Key Movers

The Australian dollar drifted lower through trade on Thursday, having failed to extend the weeks early uptick and push through 0.70 US cents. The AUD traded sideways for much of the domestic session, maintaining a 25-point range and bouncing between 0.6973 and 0.6996, before shifting back toward 0.6950 as risk appetite faltered. Markets shifted focus toward haven assets, following a ruling by the US supreme court that will allow New York prosecutors access to President Trump’s financial records. Equities and risk correlated currencies were forced lower in the minutes following the verdict as the possibility for further political instability added to the environment of uncertainty.

After UK Chancellor of the Exchequer Rishi Sunak's statement on Wednesday, sterling rose across the board. Investors welcomed the extra fiscal stimulus. GBP/USD topped out at around 1.2670, however has since fallen back as risk-off trade sees a flight to haven assets. Its cause wasn't aided by the EU's chief Brexit negotiator advising that there were still big gaps between the two sides after its latest round of talks. We can expect Brexit to have a bigger influence on sterling’s value the deeper we go into 2020, especially from September onwards.

Expected Ranges

USD/CAD: 1.356 - 1.362 ▼

USD/AUD: 1.435 - 1.443 ▼

GBP/USD: 1.257 - 1.266 ▼

EUR/USD: 1.125 - 1.132 ▼