Daily Currency Update

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Rising covid cases push dollar higher

USD - United States Dollar

In the US, an emerging third spike in coronavirus cases fueled nearly 900,000 new unemployment claims last week. The inability to stabilize jobless claims paralyzed equity markets, and the US dollar, along with the Japanese yen and Swiss franc, gained strength against other currencies.

More than 898,000 people filed new unemployment claims last week and it was considerably higher than the forecast of 840,000. The job losses are compounded by the lack of federal support. Again, we have another day in which the White House, Republicans in the Senate, and Democrats have teased concessions on an aid package.

COVID-19 continued to infect Americans. New cases are up 23% over the last two weeks. Senator Kamala Harris, the Democratic vice-presidential nominee, canceled campaign appearances after two aides tested positive. President Donald Trump, meanwhile, scheduled a town hall event to compete against Joe Biden’s town hall. Their debate was canceled because the President tested positive for COVID-19.

Equity markets were down this morning, and the US dollar gained strength against the Australian dollar and New Zealand dollar. The Canadian dollar has remained steady.

Key Movers

The Euro traded lower against most of its counterparts yesterday as news that the coronavirus pandemic in Europe is worsening. Italy reported its highest ever daily virus cases while Germany is closing in on its record high. France declared a national state of emergency that will mean curfews for major French cities between 6am-9pm. Investors will be keenly watching European data releases next month when October’s data is released to see just how badly the European economy will be affected. EURUSD has fallen to lows of 1.1715 while GBPEUR is holding back above 1.10 and briefly touched a high of 1.11.

UK chief Brexit negotiator Lord David Frost told Prime Minister Boris Johnson not to walk away from Brexit trade talks because 'deals to cover security and fishing were possible over the next two weeks'. He said that any final decision on whether the UK will stay at the table or walk away towards a no-deal outcome will not come before Friday and will depend on signals from the European Council meeting that is scheduled to begin today. If an extension is put in place, we could see a fall for sterling with GBPUSD holding below 1.30 while a no deal will obviously cause a very sharp decline.

The AUD opens in much the same position this morning having tracked sideways through trade on Wednesday. Despite weakness across US domestic data sets and a broader dollar correction the AUD struggled to maintain any upward momentum bouncing between 0.7155 and 0.7190. The AUD remains vulnerable to broader corrections in the risk narrative, fluctuating in response to changes in market sentiment, driven by global growth and fiscal stimulus expectations and equity performance.

Expected Ranges

EUR/USD: 1.169 - 1.175 ▲

GBP/USD: 1.280 - 1.303 ▲

AUD/USD: 0.705 - 0.716 ▲

USD/CAD: 1.314 - 1.325 ▲