The U.S. dollar rose against many of its counterparts to start the week. While there was very little fundamental data for traders to work with, geopolitical developments across the globe dominated headlines.
Overview
The U.S. dollar rose against many of its counterparts to start the week. While there was very little fundamental data for traders to work with, geopolitical developments across the globe dominated headlines.
Markets are trying to digest the potential effectiveness and legality of President Trump’s actions over the weekend. Amidst frustration with a lack of a deal on Capitol Hill, the President signed four executive orders aimed at virus relief. The orders included a temporary payroll tax deferral and eviction protection. It is unclear whether lawmakers on the Hill will continue to work on a longer-term deal.
At the same time, China-US tensions continued to rise. China issued sanctions on 11 Americans including Republican Senators Marco Rubio and Ted Cruz who “behaved badly on Hong-Kong related issues.” The move is seen as a retaliation to earlier sanctions the U.S. put on some Chinese officials.
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EUR
The Euro is trading on its backfoot for a second straight day. After rallying 5% during the month of July, the common currency has been unable to hold any attempts to break higher towards new two-year highs. The Euro faced downward pressure overnight after the Bank of France warned that the pace of the economic recovery was slowing and was 7% lower than normal levels in July. Over the past three days, Italy reported its two highest number of new COVID cases in more than two months.
CAD
The Canadian dollar was able to shrug off widespread U.S. dollar strength and open the week mostly flat versus the greenback. The price of West Texas Intermediate rose over 1.5%, boosting the commodity-based loonie. The Canadian dollar is experiencing a modest gain in early trading on the back of decent fundamental data. According to the Bloomberg Nanos Canadian Confidence Index, consumer sentiment turned positive for the first time since the beginning of the pandemic. The Index registered at 51 last week, from 49.8 a week earlier. 50 is the demarcation between positive and negative.
