Daily Currency Update

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Consumer confidence up. Dollar down?

USD - United States Dollar

A leading indicator of US consumer spending increased in the month of September.

The Conference Board Consumer Confidence Index increased to 101.8 in September, up nearly 15 points from August and better than the forecasted 90.

The survey of about 3,000 households asks respondents to rate the relative level of current and future economic conditions including labor availability, business conditions, and overall economic situation. And because financial confidence is a leading indicator of consumer spending, when the index returns numbers greater than the forecast, its typically good for currency.

However, with an upcoming presidential election and continued deadlock surrounding a US coronavirus relief package, the US dollar continued to fluctuate. Demand for the dollar declined for the second straight day.

The EURUSD pair climbed through 1.17. And against other currencies, the trading levels were choppy within limited ranges.

Key Movers

With renewed optimism about Brexit talks yesterday the Great British pound was the markets best performing currency. The UK and EU will continue to talk and negotiate despite both sides not ceding any ground on the UK's controversial Internal Market Bill. The EU has stated that the UK has until the end of the month to remove the controversial elements on state aid and export licenses in Northern Ireland before they face legal action.

The pound was also buoyed on comments from Deputy Bank of England Governor Dave Ramsden who spoke yesterday in a recorded interview that negative interest rates, despite being in the toolbox, were not appropriate. Ramsden said that he sees “the effective lower band still at 0.1% which is where Bank rates are at present. It is useful to stress that". You can't get a clearer view from an MPC member than that.

The Australian dollar crept upward through trade on Monday, supported by improved risk sentiment led by a rally across equity markets. With little domestic data on hand to drive direction the AUD maintained a narrow trading band throughout the local session bouncing off support at 0.7030 yet struggling to extend beyond 0.7050. While moves remained largely muted overnight commodity and growth led currencies found some support amid improved appetite for risk after equities and US stock jumped 1%, halting a four-week decline. Attentions this week remain with the overall risk narrative as investors continue to adjust growth expectations and position ahead of a host of uncertainties leading into year end.

Expected Ranges

EUR/USD: 1.165 - 1.174 ▲

GBP/USD: 1.283 - 1.288 ▼

AUD/USD: 1.335 - 1.340 ▲