Daily Currency Update

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Demand for the US dollar firms up

USD - United States Dollar

More jobless claims were filed last week than forecast and those claims have flattened out at a level much higher than prior to the pandemic shutdowns.

Unemployment benefits that are associated with the jobless claims may end soon if Congress doesn’t extend them. However, since President Donald Trump claimed to end talks and the reengaged talks about a stimulus package, its difficult to see if jobless Americans will secure the benefits, they need to pay rent and buy groceries. Until there’s a bill before the president, it’s all speculation.

On the heels of the vice-presidential debate, the equity markets were up. The price of oil was up nearly 2 percent. And as equities increased, the demand for the US dollar declined in correlation.

Key Movers

GBP moved on the back of Brexit headlines again yesterday as traders look to take advantage of short-term spikes in the market. Unfortunately, it seems a lot of the headlines and rumors are hearsay, leaving the market erratic and directionless. The UK and EU have no doubt made significant progress in this round of negotiations, however, are still yet to agree on fisheries and common ground legislation.

Bank of England Governor Andrew Bailey gave some insight into the health of the UK economy, which slightly aided the pound on Thursday morning. He suggested that the ‘second wave’ of coronavirus will not have the same economic impact on the UK economy as the first. Following on, he stated that certain sectors in the economy needed increased support whilst some may fail to survive properly. Alongside this, he hopes there is a Brexit deal however appreciates that post-Brexit transition will be tough. Bailey continues to speak throughout the morning.

In Australia, attention remains squarely affixed to the risk narrative ahead of today’s Royal Bank of Australia financial stability review. Investors will be keenly attuned to the RBA twice yearly report for any insight that might build on Tuesday’s dovish policy statement and provide some guidance as to the path of interest rates and QE. With many investors now expecting a rate cut as early as next month, a hawkish surprise may help push the AUD back toward the top end of recent ranges while a dovish review could see a break back toward 0.71 US cents.

Expected Ranges

EUR/USD: 1.173 - 1.177 ▲

GBP/USD: 1.290 - 1.296 ▼

AUD/USD: 0.712 - 0.716 ▼

USD/CAD: 1.322 - 1.328 ▼