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US dollar sprints ahead

USD - United States Dollar

The US dollar made steady strides against EUR, GBP, AUD and CAD for the third day in a row.

With equity markets falling yesterday, the US Dollar Currency Index climbed back above 93 for the first time since last Friday. Its up one third of a percent from yesterday. The correlation between equity markets and the US dollar, something we’ve reported since COVID-19 lockdowns, continued to influence the value of the US dollar against other currencies.

While unemployment claims have slowed, more than 800,000 people filed for unemployment benefits last week. This morning, the Bureau of Labor Statistics reported that Non-Farm Payrolls rose by 1.4 million in August despite missing the forecast. The US unemployment rate fell to 8.4%.

This signals another step toward economic recovery for the US economy.

Key Movers

France announced a 100-billion-euro economic stimulus to jump start Europe’s second largest economy. Its intended to restore the economy to pre-crisis levels by 2022 and will hand companies tax cuts and hiring subsidies.

Sterling has continued to fall away throughout the week versus the dollar as some sense of calm is restored to the value of the world's reserve currency. After peaking close to 1.35 on Tuesday it is now trading under 1.33 as we get nearer to the next round of Brexit talks scheduled to start on Tuesday next week. Talks will run through to Friday. Markets will be hoping that some narrowing of the gap between the two sides can be forged to get a deal done by the end of the year. It seems implausible a deal will be agreed next week so this will likely run on a while longer. And with the end of year deadline drawing ever nearer its likely sterling will wobble on the back of negative headlines.

The AUD had a rough session yesterday, falling from 0.7320 to 0.7265 on the day as global equities fell sharply. There was no obvious reason for the fall in equities however the moves spilled over into currency markets as commodity currencies like the Aussie and the Kiwi were hit hard while haven currencies such as the Japanese Yen and Swiss Franc outperformed.

Expected Ranges

EUR/USD: 1.178 - 1.185 ▲

GBP/USD: 1.318 - 1.331 ▲

AUD/CAD: 0.723 - 0.729 ▼

USD/CAD: 1.308 - 1.314 ▲