Daily Currency Update

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Declines continue for US dollar

USD - United States Dollar

Following the release of some of the dramatic economic stats since the Great Depression and suggestions to postpone November’s presidential election, the dollar continued to decline against other currencies.

EUR/USD hit 1.19 overnight and GBP/USD reached 1.316 early this morning. Trade with the Canadian dollar bounced between 1.341 and 1.345 overnight. These figures continued the trends highlighted by OFX Daily Commentary over the last week.

US GDP contracted at an alarming rate, with second quarter down 9.5% from the previous quarter. While there have been signs of a recovery since the April low, the US remains in the grips of the coronavirus. States’ inability to curb its spreads and their refusal to reinstate lockdown measures, there are signs activity and mobility are levelling off. With the US interest yield advantage eroded, a broadly positive risk-on mood and renewed euro demand, the USD is likely to remain under pressure through the back half of 2020.

Key Movers

The euro and GBP both outperformed through Thursday with the single currency continuing to bask in the aftereffects of the EU recovery Fund agreement and largely positive signs surrounding COVID-19 containment. While hotspots for new infections are emerging across the continent, numbers remain manageable (at this stage) and with the rate of infection well short of that in the US, renewed demand for the euro is expected to continue. Having broken 1.18, the currency is poised to move above 1.1850 and extend toward 1.20 in coming days/weeks.

Sterling broke above 1.30 amid ongoing US selling. While the UK remains embroiled in Brexit negotiations and struggles to respond to the economic effects of the pandemic, its recent upturn can only be attributed to broad based USD weakness. Sterling touched 1.3102, before edging lower this morning.

Expected Ranges

USD/CAD: 1.337 - 1.345 ▼

GBP/USD: 1.303 - 1.316 ▼

EUR/USD: 1.179 - 1.190 ▼

USD/AUD: 1.384 - 1.401 ▲