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European lockdowns increase USD demand

USD - United States Dollar

With new lockdowns increasing in Europe, there’s been a slight rise in demand for US dollars. Rising cases loads in Europe have prompted Germany, France, Italy, and other countries to extend its lockdowns. The restrictions have hampered a global economic recovery.

Meanwhile, in the US today Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen have been scheduled to testify on the quarterly CARES Act report before the House Financial Services Committee. Many Powell and Yellen have shown a desire to keep stimulating the economy.

The US Dollar Index was up half a percent this morning to 92.165.

Key Movers

The UK jobless rate unexpectedly fell to 5.0% in the three months prior to January, when the country entered a new lockdown, below its forecast of a rise to 5.2%. Average wage growth rose to 4.8%, its highest since March 2008, though this reflects how job losses have been greatest in low-paid sectors such as retail and hospitality, rather than higher pay for people who are still in work. The pound slipped below 1.3775 against the US dollar this morning which could have been due to dollar strength as investors bought the US dollar.

On the data front there are no scheduled releases today in Australia. Looking ahead this week and tomorrow we will see the release of monthly Purchasing Managers' Index (PMI) and Goods Trade Balance. From a technical perspective, the AUD/USD pair is currently trading at 0.7743. We continue to expect support to hold on moves approaching 0.7730 while now any upward push will likely meet resistance around 0.7820.

Expected Ranges

EUR/USD: 1.186 - 1.194 ▲

GBP/USD: 1.375 - 1.386 ▲

AUD/USD: 0.765 - 0.775 ▲

USD/CAD: 1.250 - 1.258 ▲