Daily Currency Update

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Has the dollar bottomed out?

USD - United States Dollar

After reaching recent lows against the euro and Great British pound overnight, the dollar this morning has started to make slight gains. Those gains, ever so slight, may be the range the dollar has landed.

Overnight, the EURO/USD broke through 1.1807 and has since returned to 1.17. The GBP/USD hit 1.306 in early morning trading. Against the Canadian dollar, USD reached a 7-day high but its down nearly 8% from its 3-month high on May 2.

Yesterday’s Federal Reserve FOMC didn’t provide an exciting punch to shift the markets back toward the dollar. And with Congress debating the merits of another economic stimulus plan, the pandemic continues to drive the US economy.

Expect more of the same. This morning, the US Department of Commerce reported a i.5% drop in the second quarter for Gross domestic product. Annualized, GDP dropped 32.9%. Unless the US can minimize the economic impact of COVID-19, expect a weaker dollar.

Key Movers

The Australian dollar crept upward through trade on Wednesday amid dovish commentary from the US federal reserve and a broadly upbeat risk on tone. Having struggle to consolidate a break above 0.7150 throughout the domestic session the AUD stretched its legs overnight and appears poised to break through 0.72 before resistance and profit taking tempered gains. Having touched intraday and 15-month highs at 0.7195 the AUD has edged marginally lower into overnight trading.

The number of cars built in the UK over the past six months has slumped to the lowest since 1954, down 42% on the same period last year. The trade body estimated that 11,349 jobs were lost in the past six months at carmakers and companies which supply them with parts and services. To combat small businesses from collapsing it’s been widely reported over the last 24 hours that the government is expanding its COVID-19 rescue loan scheme. Brexit uncertainty and questions over the economy’s ability to rebound after the pandemic weigh on the currency.

Expected Ranges

USD/CAD: 1.333 - 1.345 ▲

USD/AUD: 1.390 - 1.403 ▲

GBP/USD: 1.294 - 1.306 ▼

EUR/USD: 1.173 - 1.180 ▼