Daily Currency Update

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Demand reaches one week high

USD - United States Dollar

Demand for the US dollar increased for the second trading day in a row, and it reached 7-day highs with several trading partners.

The dollar strengthened against the euro, Great British Pound, Australian dollar and Canadian dollar. It reached 7-day highs against all four currencies in early morning trading.

EURUSD fell through 1.18. GBPUSD, driven by increasing cases of COVID-19 in the UK, fell below 1.28. AUDUSD approached 0.72. USDCAD went through 1.32 and traded at 1.329 at the time of writing.

What’s driving demand? Equity markets are down. The S&P500 is down 2.5% and NASDAQ is down 1.5%. Traders have moved their money into US dollars to act as a haven for the volatility.

Key Movers

A fresh wave of COVID-19 cases in Europe look to have also taken the sting out of any potential recovery in markets as fresh lockdowns look to be put in force. Both Spain and the United Kingdom saw daily infection surge as governments look to contain cases with limiting gatherings and enforcing curfews.

Throughout the week, European lawmakers will be meeting to discuss several concerns they have with the current external geopolitical situation. These range from tensions with China to Brexit negotiations. There will be a raft of manufacturing and services data released on Wednesday morning to look out for.

The potential for negative interest rates by the Bank of England and ongoing hopes for a Brexit agreement between the United Kingdom and Europe look set to heighten volatility for cable before the imposed negotiation deadlines by October 15.

Expected Ranges

EUR/USD: 1.173 - 1.187 ▲

GBP/USD: 1.278 - 1.296 ▲

AUD/USD: 0.720 - 0.732 ▲

USD/CAD: 1.317 - 1.331 ▲