Daily Market Update

Dollar Weakness Returning with Less Doubts Elsewhere

July 09, 2020

The U.S. Dollar got crushed yesterday as currencies across the board advanced as the number of infections increased significantly on a daily basis in the past week.

Overview

Equity markets continue to see positivity even as some reports try to gauge the magnitude of permanent job losses resulting from the unprecedented inactivity forced on business. Giant tech companies keep seeing their fortunes advance while United Airlines may layoff as much as half its staff in the next few weeks as airline payroll aid ceases soon. The mixed signals are not boding well for the buck as re-openings elsewhere are flourishing although some restrictions have been reinforced to prevent hospitalizations and maintain contagion under control.

Today’s Initial Jobless Claim data showed less claims than expected even in Continuing Claims. It is possible that another stock market rally develops even in the midst of uncertainty for small business. This is in turn will further solidify greenback weakness. European and Asian stocks have also been revived even as investors try to digest the potential changes to conducting business in Hong Kong. For now, the buck’s correlation with stocks is the strongest it has been since 2012.

 

What to Watch Today…

  • No major events scheduled for today

Complete Economic Calendar can be found here.

 

EUR

The Euro is rising on hopes that all member nations will come to agreement and pass the much-anticipated rescue package that almost represents €1.0Trillion as more relief loans are added. Germany’s Chancellor Angela Merkel is now also leading the EU to make sure green infrastructure is woven into the plan for action. There is no guarantee of the passing being achieved within the next few weeks, but recent statements from national leaders in talks say the plan is to settle on it all mid-month. The shared currency only has room to grow as this comes to fruition and the opening of the economy continues.

 

CAD

The Canadian Dollar is trading at its strongest level in three weeks following confirmation from the government that they can handle debt resulting from the help directed at preventing COVID-19 damage. Une Housing Starts this morning also revealed better than expected expansion for June. Tomorrow we will get a snapshot of the employment situation, which could mean only more reason for appreciation. Oil prices also seem like a positive factor as WTI crude price stays hovering above $40,0/barrel. We have been surprised by the weakness in “Loonie” but foresee our call for much better ranges will manifest second half of the year.

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