Daily Market Update

Employment Situation Picked Up, So Did Buck

August 07, 2020

The U.S. Dollar is trading much stronger this morning based on a loss of risk-appetite across global markets emanating from concern over worsening relations between China and the U.S.

Overview

Tech markets have enjoyed a rise in this pandemic, but the White House is sending signals of turbulence after executive orders that will prohibit U.S. residents from using popular applications TikTok and WeChat, owned by Tencent. These orders are scheduled to officially be enforced in 45 days.

Additionally, reports state that last night’s meeting between the administration and Senate Democrats did not go well, with a three-hour battle that accomplished nothing that guarantees the fiscal help much needed by the economy. Most European and all Asian exchanges finished in the red during those trading sessions. By mandated order, the buck is once again playing a safe-haven role based on the tension and uncertainty these decisions bring into the equation as we battle a pandemic.

Today’s July Non-Farm Payroll and Unemployment figures revealed a better situation than expected as private jobs improved by higher estimates and the rate also came down. The economy added 1.7MM instead of 1.48MM payrolls and joblessness fell from 10.6% to 10.2%. Furthermore, Average Hourly Earnings rose 0.2% instead of contracting by (-0.5%) as forecast. Slight improvements to indicators may be an ingredient towards easing the strength across majors, which have resurged 2.3% since mid-July according to the Bloomberg Dollar Spot Index.

 

What to Watch Today…

  • No major events scheduled today

Complete Economic Calendar can be found here.

 

EUR

The Euro remains trading around its best level in two years, but has started to show some deceleration today after the news of China’s issues with the U.S.  Solid Purchasing Managers Index figures and a determined EU mandate have proven quite beneficial to the shared currency as of late. We do have our doubts about it heading any further than where it is as countries will naturally want to be moving product, export, and growth could be limited by too expensive a Euro. Disturbances in market sentiment may play a role today in deflating Euro further.

 

CAD

The Canadian Dollar has appreciated by 2.2.% since mid-July based on better management of COVD and a surge in commodities as well as energy. The health of neighbors is important, and we foresaw a troubling situation in the U.S. aiding the price of “Loonie.” Moving forward, CAD is likely to continue advancing based on its own economic merit and better dynamics in oil as demand increases later in preparation for the colder second half of the year. Additionally, it may improve along with Mexican and American news of well-being, if indeed the rut from the coronavirus can start dissipating.

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