Daily Market Update

U.S. Dollar faces some downside, Pandemic worsening

July 01, 2020

The U.S. Dollar is starting a new month in familiar ranges today with the stronger movements seen in commodity-based currency pairs such as with ZAR, NOK, and MXN.

Overview

There seems to be a bit of a sense of slight recovery for those as well as the Antipodean currencies of AUD and NZD of about 0.5%. News this morning are not very much related to economic statistics as much as it is with the uncertainty surrounding COVID-19’s resurgence and never-ending challenge to the U.S. Statements from Federal Reserve Chairman Jerome Powell and Dr. Anthony Fauci of the Pandemic Response team only paint a blurry future that could witness severe deadliness and damage if the virus contagion is not subsided.

ADP Employment figures this morning looked better than expected and we shall see if the Manufacturing Purchasing Index for June has any influence. Economists are looking for any sign of progress in health, but traders and investors are concerned that very little can be forecast as this battle with the pandemic rolls on indefinitely until a vaccine or immunity is achieved

 

What to Watch Today…

  • Markit Manufacturing PMI

Complete Economic Calendar can be found here.

 

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EUR

The shared currency jumped by 1.1% in the month of June and is now trying to defend its gains with hopes that a much-awaited €750BN package is passed and implemented after much discussion as well as hesitation from the Netherlands and Italy. Today, the Germans officially take over the EU’s six-month rotating presidency.

The largest economy of the Euro-zone is looking to discipline the rest of the nations as the EU looks to integrate closer fiscally and seeks solutions to supply chain disturbances caused by COVID. Also, they must oversee the departure, supposedly, officially, of the U.K. from the EU.

 

GBP

The Pound is up on news that the government will be pursuing serious investments in infrastructure that could add up to billions. As the Prime Minister Boris Johnson handles many fronts, he is trying to exude confidence in his cabinet and proposing to build and get rid of austerity. Issues with handling the pandemic response have helped in dent GBP prospects, but at the moment, momentum is with Sterling as a return to negotiations related to Brexit and programs to help the population brighten U.K. economic prospects.

Recent confusion over Bank of England policy and approach may have made GBP unattractive, but a better reopening of the economy and friendlier headlines could lift the currency significantly. Additionally, the U.K. will receive a pool of talent from Hong Kong after extending visas to residents looking to flee in opposition to China’s new rules over HK.

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