The U.S. dollar is on the defensive this morning as equities around the globe trade modestly stronger.
Asian stock rose nearly a percent, but gains in Europe were muted. U.S. equity futures show American shares will rise at the open.
There is no major data slated for release today. Therefore, the greenback may continue to take its cues from the general risk environment. We will also keep an eye on potential progress on a COVID relief bill in Washington, but lawmakers have recently thrown cold water on expectations.
Empire manufacturing and industrial production are due out tomorrow morning, followed by Retail sales on Wednesday. The Federal Reserve will announce their interest rate decision Wednesday afternoon. No changes to policy are expected as the central bank starts to conduct business under a new monetary policy framework.
What to Watch Today…
- No major events scheduled for today
Complete Economic Calendar can be found here.
The New Zealand dollar was the biggest gainer to start the week, rallying half a percent against the dollar and gaining ground on all its G10 counterparts. It is reported that the island nation will lower its alert level from the most recent coronavirus outbreak. Prime Minister Jacinda Ardern will move the alert outside Auckland to level 1 from level 2, meaning more companies can conduct business.
The Australian dollar moved in the opposite direction on speculation that the Reserve Bank of Australia will consider new bond purchases and possibly cut their cash rate.
The British pound is stronger this morning, but you would be excused from not realizing it if you have not seen the rates in the past week. The sterling took a beating last week, losing nearly 4% against the U.S. dollar as Brexit headlines dominated. Credit for today’s relief rally for sterling is being given to the comparatively cheap cost of topside sterling options.
GBP/USD gains are likely to be limited as the Brexit sage approaches yet another deadline. Prime Minister Boris Johnson will present Parliament with a plan to break international law over Brexit. The Internal Market Bill would allow the U.K. to unilaterally override parts of the treaty it signed with the EU. The EU has threatened legal action. It is fairly easy to see that the two sides remain far apart with only a month left to strike a deal or risk a no-deal Brexit.