Daily Market Update

Buck Rises as Fears Take Over Markets

November 19, 2020

The U.S. Dollar is trading in tight ranges as a globe ready to declare success over the virus must face the fact that the level of infections is so worrisome that schools and businesses must send home again.

Overview

No asset out there is really having a rally, except the Turkish Lira with surprise interest rate hikes with a new central bank.

At the time of writing, the buck keeps gaining on its counterparts as stock futures predict a tough time to find a reason to rejoice. Initial Jobless Claims this morning showed that labor remains a big issue with a figure of 742K for last week when only 700K were estimated. It is becoming clearer that the overall global recovery is suffering as doubts continue over the successful distribution of any vaccine option that soon.

As the buck rises from its two-year low, we are seeing plenty of commodity-based currencies dropping in value. On Monday, the MSCI Emerging World Currency Index was hovering near its best level in over two years, which would have been very close to its highest of all time, reached back in 2018. There is little that gives certainty for the near-term to solve our pandemic issues thus the waiting game of when and how the U.S. Congress will pass a desperately needed relief fiscal package.

 

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EUR 

The Euro is losing some ground at the moment but had gained overnight some with the positive reaction to a report that the shared currency topped the greenback as the most used currency for global payments. This was the first time since 2013 the Euro had reached such circulation. Indeed, the buck has lost about 11.0% of its value since reaching a record peak in March.

As we have heard from European Central Bank President and officials, they are on wait-and-see mode on the implementation of the large European rescue package and do not foresee a very hawkish stance in the next year or longer.  These current levels may not change wildly for the next few months as it seems Euro is stuck in a range until better times.

 

GBP 

The Pound went down slightly as news of a weaker outlook for the U.K. economy hit the wire with the release of the U.K. budget. More importantly, as the government has been overextended in the pandemic, Brexit expectations are dwindling because the Prime Minister seems to have plenty of items on his plate and delays are likely to only exacerbate anxiety in the business world.

There will be more room for military spending and perhaps there will be a boost to infrastructure, but the government has let negotiations run for too long and companies made plans to or already moved away from London, thus taking tax revenue from Britain. Dark clouds over everything presently.

 

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