Currency Market Analysis

Jun 22, 2020 | Currency Market Analysis

Global Themes

A range-bound greenback eased off multiweek peaks as the second half of the year drew closer, when many hope that a global recovery will begin in earnest. Europe held an upper hand against the dollar with the euro and sterling firming above three-week lows. The Aussie and kiwi dollars were the top performers, boosted by improved risk tolerance and Australia’s central bank chief taking recent currency appreciation in stride. Canada’s loonie ticked higher, a gain tempered by weaker oil. Currencies have broadly kept to a range as recovery optimism gets checked by worries about a re-acceleration in the pace of coronavirus cases. The big worry is that a significant rise in infections could hasten more economy-damaging lockdowns. America’s data calendar kicks off with existing home sales today and includes weekly jobless claims Thursday, and key numbers Friday on consumer spending and inflation.

CAD

The loonie steadied after sinking overnight to one-week lows. Canada’s currency found a hand higher from outperforming commodity counterparts from Australia and New Zealand while it also helped that the greenback’s recent resurgence stalled. Upside for commodity currencies was checked by oil markets slipping below $40. Energy likely holds the key to the loonie this week, given a dearth of local data.

GBP

Britain’s pound stabilized after hitting three-week lows, supported by risk-on sentiment with most global equities higher. Sterling sputtered last week when it shed about two cents, as the negative interest rate debate remained a thorn in the currency’s side. Hopes of an improvement in British data this week on preliminary manufacturing and a gauge of consumer spending also buoyed the pound.

EUR

The euro firmed above its lowest level nearly in nearly three weeks as the greenback took a breather after logging its best week in a month. Recent euro strength has faded on the perception that any agreement on Europe’s big virus-combating  fund many happen later rather than sooner. Key for the euro this week are flash surveys of manufacturing Tuesday and Germany’s influential Ifo index Wednesday, all of which are forecast to improve.  


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