Daily Market Update

Diplomatic Week Starts with Weak Buck

July 20, 2020

The U.S. Dollar is trading in weaker ranges across the board after a weekend when the virus continues to do major damage to California and Florida.

Overview

The developments over the weekend put further downward pressure on markets that have witnessed mixed news on earnings and is seeing major fallout for the travel industry. Stay-at-home orders are feared they may need to be re-implemented.

Other world regions are also seeing some resurgence of the various and some restrictions have been put back in place. Naturally, confidence is down, especially when assessing the effects on the American economy and labor market. Senate Majority leader Mitch McConnell will meet with the White House today to work on a new stimulus/rescue package that could be worth $1.0 trillion or more.

There will be some photogenic diplomacy this week as U.S. State Secretary Mike Pompeo visits Britain today as they prepare for also dealing with Brexit negotiations that re-start right away. We shall see if today’s idiosyncratic events mean the continuation of the buck sinking as there is no major data until we receive the much-watched Jobless Claims on Thursday with Housing data in between on Wednesday.

 

What to Watch Today…

  • No major events scheduled for today

Complete Economic Calendar can be found here.

 

EUR

The Euro reached a fresh new 4-month high after a very productive weekend in talks over the passage of a recovery package that includes loans as well as grants. On this last point, the negotiations were stalling since the four more fiscally conservative nations of the EU (Denmark, Sweden, Netherlands, Austria) did not agree to €500.0 billion of the package being doled out without expecting repayment.

Reinforcement of loans and reducing the amount in grants is being discussed after things were in deadlock, thus the advance for the Euro based on a much-improved economic outlook once this goes through. We foresaw the appreciation for the shared currency, and it could reach new highs as the comparative analysis continues to benefit the Euro-bloc.

 

GBP

The Pound is trading at its strongest level since June 10th as the economy has opened up and aid to companies has been provided. Additionally, the U.K. has some momentum with the chances of a trade deal development as Brexit negotiators gather, a potential for continued support from the U.S., and a pool of talent to arrive from Hong Kong.  We will not see any major data until Retail Sales on Friday, thus events and their progress shall determine if Pound stays afloat or grows.

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