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Currency Market Analysis

Sep 29, 2020 | Currency Market Analysis

Global Themes

America’s dollar drifted below two-month peaks as attention turned to U.S. politics. The broadly weighed dollar index flirted with one-week lows as it softened against the euro, sterling and Canada. America’s presidential race takes center stage with tonight’s first debate between President Trump and challenger Joe Biden. The 90-minute debate lurks as a potential catalyst for the dollar, particularly if the president can improve his underdog status, according to polling data. The buck’s improved bias of late was somewhat masked by end of month and quarter positioning. The dollar has dominated in September as stocks stumbled and coronavirus infections accelerated. Market players have another eye on late week jobs data from Europe and the U.S. for clues on whose recovery appears in better shape. Ahead of tonight’s debate, a report is forecast to show a brightening in U.S. consumer confidence in September.


Canada’s dollar was steady as a weaker greenback and lower oil prices largely offset. The price of crude fell by about a percent, though prices held above $40. A September rally helped USD/CAD pare its quarterly losses to about 2%. USD/CAD has appreciated by about 2.5% in September when doubts resurfaced about the sustainability of the global recovery in the face of surging Covid infections.  


A weaker dollar and still intact hopes for an amicable Brexit deal between the UK and EU boosted sterling in end of quarter trade. The pound has wobbled in September, with GBP/USD down more than 3.5%. But sterling has shined during the third quarter as the dollar wilted. Cable was on track for a 4.5% quarterly gain. Growth concerns threaten to undercut bouts of sterling strength with a report Wednesday forecast to confirm that Britain’s economy contracted at a record pace of 20.4% in Q2 due to business closures related to quelling the economic fallout from the pandemic.


The euro rose above two-month lows in end of month trade. Europe’s single currency was poised for a winning quarter, with EUR/USD up around 4%, but a losing month, down nearly 2% in September. The euro has fallen prey to a surge in European Covid-19 infections that cast doubt on the bloc’s recovery outpacing the U.S. Data from the bloc today painted a mixed picture of the recovery as economic sentiment brightened but German consumer inflation fell below zero.

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