The U.S. dollar has started the week softer versus its major counterparts.
Overview
The greenback is lower against all of its G10 peers except the Japanese yen. The safe-haven currency is down even as European and Asian equities ticked lower. American futures point to a modestly higher, perhaps the biggest reason for the softer dollar.
The push and pull in markets are likely the result of competing for coronavirus headlines. There is some optimism that Chinese officials are containing their resurgence of cases. However, Germany reported that 1,300 workers at a slaughterhouse tested positive and California saw new cases rise to a record.
On the fundamental front, Chicago Fed National activity is due out at 8:30 a.m. Later, existing home sales for May will cross the wire. Traders will likely shift their focus to tomorrow’s Markit PMI data for a better look at the outlook for the recovery.
What to Watch Today…
- No major events scheduled for today
Complete Economic Calendar can be found here.
AUD
The Australian and New Zealand dollars were the biggest winners overnight, both gaining over half a percent against the greenback. The pair of Antipodean currencies were the beneficiaries of news out of China. Beijing reported just nine new infections, a sign that the recent outbreak is being restrained.
Technical analysts also pointed to short covering by leveraged funds as a reason the two currencies spiked higher.
GBP
The British pound is up nearly half a percent against the U.S. dollar, reversing losses from Friday. Bank of England Governor Andrew Bailey surprised many by writing an opinion piece for Bloomberg News. In his op-ed, the central bank governor signaled a major shift in the bank’s strategy for removing emergency stimulus. In short, Bailey stressed the need for the BoE to reduce its balance sheet before hiking interest rates. It is worth noting that this plan would differ from the Fed who first tightened interest rates before reducing its balance sheet back in 2014.
