Daily Currency Update

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USD demand up, down and sideways

USD - United States Dollar

Demand for the US dollar is mixed this morning amidst the transition to President-elect Joe Biden and surging coronavirus cases.

Demand for the euro drove EURUSD up a third of a percent, while USD demand has pushed GBPUSD down two-thirds of a percent and AUDUSD down a 0.2%. USDCAD has risen a third of a percent and traded above 1.31 this morning.

Varying demand has been driven by the speculation surrounding President-elect Biden’s cabinet and transition team. With Federal Reserve Chairman Jerome Powell’s term ending in 2022, rumors swirled yesterday that the would be nominated for another four years.

Biden announced Ronald Klane as his chief of staff. Klane was the Ebola czar during President Barack Obama’s second term. Klane’s selection indicates that Biden will focus on controlling the pandemic immediately. There were 142,000 new COVID-19 cases yesterday.

Key Movers

Yesterday Sterling dipped lower as rumors of another extension to the on-going Brexit negotiations swirled. The mid-November deadline looks set to be extended as the two sides are yet to come to a formal agreement on Britain’s exit from the EU. GBP/USD bounced off the 1.33 handle and is now sub 1.32 whereas GBP/EUR tempted to test 1.13 however is now back below 1.12. This morning UK gross domestic product grew by a quarterly record for the months July-September, growing by 15.5%. However, this missed the forecast of 15.8% and certainly doesn’t to cover the crash of over 20% in the 3 months prior. In a further blow for Prime Minister Boris Johnson, Director of Communications Lee Cain resigned yesterday. This suggests there is a lot of tension in the UK government right now, particularly over Brexit and how leaders are dealing with COVID-19.

The overnight session saw the Australian dollar fall slightly against the USD despite upbeat global equity markets. Having initially soared to 0.7318 in the afternoon, the AUD has fallen back below the key 0.7300 handle. The New Zealand dollar was one of the best performers on the day yesterday, ultimately forcing the AUDNZD cross lower to 1.0572, representing a 4-month low. Looking to the day ahead, we will get domestic inflation expectations from the Melbourne institute before focus shifts offshore. In New Zealand, we will get net migration data which will obviously remain subdued due to the lockdowns, Industrial production data out of the Eurozone, UK trade balance and GDP data and finally US October CPI is due.

Expected Ranges

EUR/USD: 1.176 - 1.181 ▼

GBP/USD: 1.313 - 1.322 ▲

AUD/USD: 0.7245 - 0.729 ▲

USD/CAD: 1.305 - 1.314 ▼