Daily Market Update

Dollar Dives as Equities Soar; Commodities Rise

August 11, 2020

The U.S. dollar is under pressure this morning as global equities are in the midst of an impressive rally.

Overview

European equities are over 2% stronger and American shares look to add on to yesterday’s gains.  Markets are reacting to comments from President Trump that he is considering a capital gains tax cut in an attempt to create more jobs.  The President decided against this a year ago as almost every expert pointed out it would be a tax break for the wealthy and do little for the middle class.  Either way, the President would need Congress to cut the 20% long-term capital gains rate.

Positive COVID headlines are also lifting the mood.  American hospitalizations fell to their lowest level in a month and hard-hit states Texas and California released improved data.  Russia has also claimed that it has a working vaccine, but most analysts have shrugged off the claims so far.

Fundamental data showed a slight uptick in producer prices.  The headline print showed prices increased 0.6% month over month, double the 0.3% expected.  Inflation pressures still remain well under the Fed’s target so today’s print is unlikely to affect monetary policy in the near-term.

 

What to Watch Today…

  • No major events scheduled for today

Complete Economic Calendar can be found here.

 

EUR

The Euro rose quickly following the release of strong German data and remains about half a percent stronger versus the U.S. dollar this morning.  The ZEW German investor confidence report showed that confidence in Europe’s largest economy jumped this month.  The gauge measuring prospects for the next six months popped to 71.5, beating expectations of contraction.

EUR/USD is also seeing some traction on widespread risk-on trading sentiment.

 

CAD

Commodity-backed currencies all made significant advances against the U.S. dollar, led by a 1% advance for the Norwegian krone.  The Canadian dollar rose half a percent and the price of Brent crude rallied 1% and are now over $45 a barrel.

The Australian and New Zealand dollars also benefited from Chinese leaders signaling they would like to see an easing of tensions with the United States. Increased trade between the world’s largest economies will benefit the South Pacific countries who rely on China for much of their trade.

Let’s Talk
Ready to save money, save time, and reduce risk?

It’s quick and easy to get started. Fill out the form below and a Monex USA market expert will connect with you shortly. Our team will work closely with you to develop a personalized strategy for your global payment & currency needs.

Contact us