Daily Market Update

Brexit Gets Even Uglier, Buck Basically Even

September 11, 2020

The U.S. Dollar had a mixed week of appreciating against Pound yet losing plenty of ground against other peers as a global recovery does its best to remain steady.

Overview

Thus far is up less than half a percent after many swings. Doubts across markets have grown with frustration over the lack of medical advancement in a successful vaccine that could put the pandemic to rest. British drug manufacturer Astra-Zeneca said there’s still a chance of something by end of the year despite having recently halted trials.

It has certainly been a roller coaster of risk-on/risk-off sentiment as the Dow Jones Industrial Average has declined by almost 6.0% in the last eight days. Congress here has not managed to come up with a rescue bill as Democrats prevented passage yesterday based on the belief the meat in the deal will not be enough to boost the economy as desired. 

Data-wise, the buck remains the same after Consumer Price Index figures for August that came out just slightly better than expected at 0.4% over 0.3% est. Additionally, Average Hourly Earnings also rose by 3.3%, but this is a slower pace than the month prior.

 

What to Watch Today…

  • No major events scheduled for today

Complete Economic Calendar can be found here.

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GBP

The Pound is down by over 5.0% since the start of the month as Brexit is the dark cloud that is now permanently shadowing anything progressive or of improvement in the U.K. 

There was a meeting between negotiating parties over the proposed Internal Market legislation by Prime Minister Boris Johnson and it did not go well. EU officials said the British have three weeks to withdraw this idea or face legal action as this threatens to violate the already agreed-upon withdrawal agreement.

Certainly seems like the British want to go “rogue” by maintaining a very aggressive stance against its European partners while it tries to sign a free trade pact with Japan.

 

EUR

The Euro swung all week and ended up even after statements from monetary policymakers that put the brakes on paid appreciation that saw it reach its best level in 28 months. 

Indeed, the shared currency continues to trade around its best levels in two years based on confidence among European Central Bank officials, yet the Chief Economist wants to make a point clear: a very strong Euro can affect the pace of economic growth and prevent inflation the ECB desperately wants to see.

Philip Lane has made it his duty in the past week and a half by making statements that focus on not rejoicing at the prospects of costly Euros beyond certain ranges.

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