Currency Outlook

AUGUST 2020 – IN BRIEF

What Happened

  • As we foresaw, the U.S. Dollar declined by over 3.0% in July based on COVID-19 chaos
  • Euro value climbed to its strongest level in over two years after the rescue package passed and economic indicators returned to expansion
  • Sanctions and consulate shutdowns between China and the U.S. have worsened diplomacy
  • Pound found a reason to gain over 4.0% of its value despite Brexit still incomplete
  • Once again, the Antipodean currencies (AUD & NZD) appreciated, along with other European tender based on virus management

 

Tempus’ View

  • Labor sector concerns will keep haunting the buck until fiscal aid eases financial worry
  • Congress will need to approve further relief until the pandemic is contained
  • An appetite for American stocks, particularly for tech in Nasdaq, could foster a slight dollar recovery if earnings keep impressing
  • MXN and CAD could suffer, after gaining in July, if oil production cuts hit brakes
  • European currencies could play more of a role of safe-haven if indeed the performance and return from COVID in U.S. keeps stalling

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