Daily Market Update

Dollar Gains as Risk Falls; BOE Sinks Sterling

June 18, 2020

Currency markets were fairly quiet overnight but have sprung to life in early trading with the U.S. dollar rising against most of its counterparts.

Overview

At the time of writing, the Bloomberg Spot Dollar Index is up 0.3%.  U.S. equity futures show shares will fall at the open adding to reasons to buy the dollar this morning.

Its Thursday which means we get a fresh look at jobless claims and the continuing assault the coronavirus is waging against the labor market.  Another 1.5 million Americans filed claims for unemployment last week, slightly less than the week prior.  Continuing claims remains historically high with over 20M Americans remaining on jobless benefits.

Not all was negative though.  The Philadelphia Fed Business Outlook surprised to the upside registering a gain of 27.5, beating expectation for a negative -21.4.

There are a number of Fed speakers on today’s docket including Bullard and Daly.

 

What to Watch Today…

  • No major events scheduled for today

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CAD

A recovery in oil prices has allowed commodity-backed currencies to protect themselves from widespread U.S. dollar strength.  For example, the Canadian dollar is unchanged versus its American counterpart despite the greenback gaining against the rest of the G10 board.

The Norwegian krone is also slightly stronger after Norges Bank raised its outlook for the economy and said it would be ready to start raising rates again in 2022.

 

GBP

The British pound is selling off this morning, losing a full percent against the U.S. dollar and touching its lowest level since June 1.   The Bank of England left rates unchanged at 0.1% but added 100 billion GBP to its bond purchasing program which met some expectations.  The BoE did indicate the are willing to slow the speed of purchases and expects this round of purchases to conclude by the end of the year. Some expected the bank to add even more monetary stimulus, which caused GBP/USD to initially pop higher.  But those gains proved brief as the Sterling sharply turned lower showing the pair’s upward momentum may be capped.

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