Daily Market Update

Buck Finds Strength Behind Fears Elsewhere

September 09, 2020

The U.S. Dollar is trading stronger against its major peers as a market correction and underwhelming news on the medical fight against COVID-19 hits the brakes.

Overview

Positive sentiment had equities flourishing last week as news arrived that vaccine developments were occurring simultaneously in different regions of the world, but unfortunately they have run into issues at British Astra-Zeneca and Russian vaccine trials.

Naturally, this is boding well for the buck and the insistence by some that stocks have climbed too high, ignoring the lack of full international cohesive effort to eliminate the disease everywhere. Without any major headlines nor major data released, the ongoing doubt will keep playing a friendly tune for greenback resurgence as a safe-haven.

We may get some action in Canadian Dollar flow after 10AM as we get an announcement from the Bank of Canada meeting, which is expected to conclude that the economy will need help for years to come, but no cuts or QE-program addition. Their talking points could cause the “Loonie” to falter further after yesterday established the first time WTI Crude oil prices fell below $40.0/barrel. We shall see if technology continues to decline in value and if that sell-off keeps aiding the buck.

 

What to Watch Today…

  • No major events scheduled for today

Complete Economic Calendar can be found here.

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EUR

The Euro is looking eager to weaken after a week of major losses based on the concern by monetary policy officials and business leaders that the exchange rate may be a detriment to the economic push desired by all. Tomorrow we will see Christine Lagarde and the European Central Bank meet, which is likely to maintain a very accommodative language and further highlight the need to combat high costs to access European markets. Ahead of the meeting, traders are betting that Lagarde will throw all tools on the table and a willingness to help endlessly, thus the reason why Euro easily stepped away from its two-year highs.

 

GBP

Sterling is looking weaker and weaker and is now at its lowest point since the end of July after having improved. We have been writing and talking about this so much we should receive honorary citizenship, but the Brexit situation has somehow managed to get worse. In a move that caused the collapse of Pound, Prime Minister Boris Johnson proposed to change the language of the already agreed-upon withdrawal agreement with the EU.

This dramatic effort is actually illegal since many hurdles had to be jumped and approved accordingly during the years-long negotiations. While some say this is just an attempt at applying tougher diplomacy to achieve a trade pact, the reality is that this only aggravates the already fragile relationship and convinces Scotland to put forth a proposal to leave the U.K. We foresaw trouble and a weaker currency, but this is quite chaotic and merits rapid depreciation.

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