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Slide continues for US dollar

USD - United States Dollar

A basket of currencies weighted against the US dollar failed to break through 93 yesterday, a clear illustration of the dollar’s continued weakness.

The US Dollar Index bottomed out at 92.18 overnight and has made a half percent climb. As has been the trend since lockdown, the US dollar was weak and the S&P 500 marked fresh highs. It appears poised to close above the February 2019 peak.
As COVID-19 case numbers across the US are trending in the right direction markets have chased risk assets higher.

The wide held market consensus is for a weaker US dollar. Questions are being raised as to how far the dollar can slide. While we have seen a renewed demand to short the world's base currency, when compared with past dollar downturns it would appear there is ample scope for further weakness.

Key Movers

The Australian dollar extended its rally through trade on Tuesday amid record gains across equities and sustained US dollar weakness. The S&P 500 marked fresh highs and appears poised to close above the February 2019 peak. The Australian dollar followed equities pushing through 0.7250 to touch intraday and year to date highs at 0.7265.

Great British pound advanced against both the euro and US dollar in the past 24 hours as Brexit talks resume. GBP/EUR remains range bound, but movement overnight has taken the currency pair from 1.1030 to above 1.1100 and GBP/USD is now back above 1.3250, which were the levels seen prior to sterling’s Covid-19 crash back in March. However, it is worth mentioning the movement in GBP/USD has more to do with US dollar weakness than it does pound strength, as the ongoing effects of the Federal Reserve’s stimulus programs and lowered expectations for fresh stimulus saw the US dollar fall.

Expected Ranges

EUR/USD: 1.189 - 1.195 ▼

GBP/USD: 1.317 - 1.326 ▲

AUD/USD: 0.722 - 0.727 ▲

USD/CAD: 1.313 - 1.318 ▲