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Currency Market Analysis

Jun 29, 2020 | Currency Market Analysis

Global Themes

The U.S. dollar softened in coronavirus-driven trade. The buck was mixed but mostly weaker with the euro leading the charge, with EURUSD up 0.5%. The yen steadied, sterling fell while commodity currencies like the Canadian dollar rose along with broader stock and oil markets. Wall Street showing signs of rebounding after a Friday plunge served as a risk-on signal and an excuse to loosen ties to the U.S. currency. Markets continue to ebb and flow with one eye on data and the other on the spike in coronavirus infection rates that threaten to undercut signs of a nascent economic recovery. Top focus of the week will be remarks Tuesday from the Fed chairman, Jerome Powell, and America’s June jobs report which is due Thursday ahead of America’s long holiday weekend for the Fourth of July.

EUR

The euro rallied into the new week, building on the previous week’s gain. Risk-on trade with Wall Street futures up and data showing a stronger economic pulse for Germany, the bloc’s largest economy, converged to boost the single currency. Preliminary data showed a surprise increase in German consumer inflation to a 0.9% annual rate in June, compared to forecasts to steady at 0.6%. 

GBP

A subdued U.K. pound fell to one-month lows against an otherwise weaker U.S. currency. Brexit trade talks resume this week, a sensitive and thorny subject for sterling. This is billed as the week that Britain must decide whether to seek an extension of its transition phase with the EU beyond year-end. Keeping the Dec. 31 deadline could pressure the pound as it would keep alive the risk of a no-deal Brexit.

CAD

A bullish start to the week for stocks and oil buoyed Canada’s commodity-driven currency. Oil firmed about a percent to around $39. Data Tuesday is forecast to show Canada’s economy took a double-digit plunge in April after GDP contracted more than 7% in March. Canada also has a holiday-abbreviated week with local markets closed July 1 for Canada Day. 


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