GBP>EUR – 1.1063
GBP>USD – 1.3095
EUR>USD – 1.1827
GBP>CAD – 1.7380
GBP>AUD – 1.8149
GBP>SEK – 11.395
GBP>AED – 4.8071
GBP>HKD – 10.152
GBP>ZAR – 22.630
- USD Eyes on US ADP stimulus talks
- GBP Snaps 3-day losing streak ahead of UK Services PMI
- Eurozone Retail sales jump 1.3% YoY, Euro tests highs?
- Gold Temporary pullback before moving to $2100? – TDS
Cable has been floated once again by a broad softening in the dollar. The pair scaled to a 1.3124 peak, extending the rebound from yesterday’s six-day low at 1.2981 and drawing back in on last Friday’s five-month peak at 1.3171. The pound has fared less well against the likes of the euro and Australian dollar, among other currencies. The pound outperformed last week amid signs that have led markets to factor improved odds for an EU-UK trade deal, with several sourced press reports suggesting that discussions are going better than the official line suggests. There is now summer a hiatus in negotiations, which will resume on the week of August 17th. The final round of discussions is set for the week commencing October 2nd. Narratives last week had also been noting a pick-up in the pace of economic recovery in the UK, though final July manufacturing PMI was unexpectedly revised lower while localized lockdowns, including in the economically-important Manchester area, and the continued media-driven “feardemic,” is clouding the outlook for the UK economy at a time when government pandemic business support measures have started to unwind (compensation for furloughed workers was reduced this week). Recent dollar underperformance has been somewhat flattering the pound, which still registers as the weakest of the main currencies on the year-to-date, and by some distance in trade-weighted terms. The BoE reviews policy this week (announcing on Thursday), where a no change is widely anticipated, alongside what will no doubt be a reassuringly strong commitment to maintaining an ultra-accommodative policy.
The dollar has remained soft while gold prices have spurted to a fresh nominal high at $2,040.55 (still a long way from a record peak in inflation-adjusted terms). Washington’s policy stalemate on another pandemic relief bill has remained a major source of concern to investors, and most Treasury yields have pushed further into the historic low territory. Though Wall Street found modest support on some signs of progress on a fiscal deal — participants said they are getting closer while vowing to work around the clock — both sides remained far apart. Markets are sensitive to this given that high-frequency data is painting a picture of flagging growth momentum in the U.S. economy. The narrow trade-weighted USD index (DXY) ebbed under Tuesday’s low at 93.15 on route to a 93.06 nadir. The new low marks a near two-thirds retrace of the dollar’s rebound that was seen on Friday and Monday, from the 27-month low at 92.55 to the bounce peak at 93.99. EUR-USD concurrently lifted to a peak at 1.1817, its loftiest level since Friday. Cable has seen a similar price action, as has AUD-USD, which printed a high at 0.7193, despite S&P Ratings putting Australia’s state of Victoria on negative ratings watch as a consequence of the lockdown measures being taken there. USD-JPY ebbed to a five-day low at 105.51 on the back of the dollar’s weakness, with the yen losing ground to the Australian dollar today and holding steady versus the euro and other currencies. USD-CAD fell to its lowest level since February, at 1.3266. Front-month WTI crude futures have remained buoyant after scaling to a 13-day high yesterday at $42.09.
XE Market Analysis Europe – 5th Aug 2020
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