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Currency Market Analysis

Aug 24, 2020 | Currency Market Analysis

Global Themes

USD revival in play after PMIs boost greenback

The US dollar ended last week with a stronger showing after an improvement in the closely-watched PMI numbers boosted the greenback.

The US’s August PMIs exceeded expectations – with the manufacturing index at 53.6 versus expectations of 51.9 while services (54.8) also beat forecasts (50.9).

The US’s better results contrasts with weaker than expected numbers from Europe in this month’s reding with big misses in French and German services activity hitting the euro.

UK numbers also beat expectations.

Euro hit

The USDSGD climbed 0.3% as it rose from six-month lows.

The USD’s strength hit European currencies the hardest.

The EUDSGD hit one-month lows while the Swiss franc fell from five-year highs.

The Australian and New Zealand dollars were both weaker.

Politics in play

The US political environment will drive market this week with a quieter schedule on economic releases.

The US and China are expected to work on their trade – and other – differences this week.

US-China trade talks are part of a six-month review after “phase one” trade deal was signed in January. Beijing said last week the two sides would talk “in coming days”.

The US Federal Reserve Jackson Hole symposium is also due this week with the potential for major policy announcements from key central banks.

The Republican National Convention is also due this week with President Donald Trump to accept the party’s presidential nomination from the White House.


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