The US Dollar FX Rate that measures the strength of the greenback against a broad basket of currencies moves downwards, breaking critical support of 92.50.
The US Dollar index is showing weakness with the Fed policy bringing liquidity to the market. The coronavirus pandemic is causing much concern among leaders as measures are not adequate to meet the crisis.
US Dollar FX Rate Gives Up Crucial Support Levels
The US Dollar Index gave up another crucial level at 93.00 early this week. On Tuesday, the US Dollar touched a low of 92.13 but later pulled back from its lows to trade at 92.58 at 3.14 pm GST on Wednesday.
The US Dollar went below 95.00 levels in the last week of July. In August, it has gone below the critical 93.00 levels too. The greenback remains under pressure and is now trading at the yearâ€™s lows. It broke crucial support at 92.50 levels too and is trading at 92.13 levels on Tuesday, during mid-trade. The greenback was at its highest level at 102.91 in March.
The White House has put a further ban on Huawei, the Chinese tech giant. The company is banned from using chips produced by US technology or software.
US lawmakers continue to remain in discussions regarding the fiscal stimulus package, without much progress seen. The weak US Dollar FX rate makes exports cheaper for other countries, giving it a competitive advantage.
The Nasdaq and the S&P 500 are at fresh highs this week.
EUR/GBP Currency Pair Finds Support at 0.9000
The Euro against the US Dollar FX rate is trading at 1.1900 on Wednesday, 19 Aug.
The EUR/GBP currency pair retreated from 0.9070 levels of last week. After falling steeply on Monday, the currency pair took support at 0.9000 levels on Tuesday. The British Pound saw some heavy selling, which was another reason for the bounce in the euro.
The EUR/GBP currency pair has been moving within a short-range this month between 0.9071 and 0.8969 in August. Investors have to wait for a sustainable movement on either side before positioning their trade.
With Brexit talks doing its seventh round, negotiators have to put aside their differences to continue talks, feel experts.
GBP/EUR Exchange Rate Sees Mild Fluctuations
GBP/EUR currency pair started soft but is expected to be volatile for the week. The British Pound has been the best moving currency of late. The weakening US Dollar FX rate is keeping the pound strong. At 2.55 pm GMT, the GBP/EUR was trading at 1.1078.
The flash PMI data is expected for both the Euro and the Pound. It will give more details on the economic recovery in the United Kingdom and the Eurozone. The economic performances of these areas are much awaited.
Trade negotiations will determine further movement in the currency pair. If talks are successful, the currency pair may see volatile movement and strengthen the Sterling further.
Irish Taoiseach (Prime Minister Micheal Martin) said last week that the British PM shows a â€śgenuine desireâ€ť to draw a trade deal. EU Chief Negotiator Michel Barnier is also positive that an agreement will be drawn soon.
The European Council meeting to take place in October will see a trade deal if it does not occur now say, strategists.
The Sterling continues performing well in spite of the GDP statistics released last week, in which the UK saw a deep contraction. The coronavirus crisis has burdened the economy. Hence positive talks are welcomed, currently.
Australian Dollar Strengthens Against The US Dollar
The AUD/USD exchange pair is at a multi-month high. The US Dollar sees increasing selling pressure. The country requires further fiscal and monetary support, says Governor Philip Lowe. The ailing economy requires greater fiscal spending, especially with the health situation hit hard by the pandemic, he says. According to the Monetary Policy Meeting Minutes on Tuesday, the labor market has been affected while the unemployment rate has touched a 22-year high. Wage growth is at all-time lows.
New Zealand PPI Input was at -1.0% against the previous quarter at -0.3%. PPI Output was at -0.3% against the previous quarter data at 0.1%
Japan saw a surplus in goods trade for the first time in July. However, exports have slowed with the coronavirus pandemic. Exports to China have improved by 8.2% from last year, says a report from the Finance Ministry. Japanâ€™s trade surplus is at 11.6 billion yen. Imports have gone down 223%, especially as crude oil imports from the UAE have gone down. Japan has one of the lowest interest rates.
USD/CAD Exchange Pair Need Additional Stimulus to Move Upwards
The US Dollar FX Rate against the CAD is trading below 1.3200 levels. The next support is at 1.3135. As the currency pair has broken key supports, it is expected to further weaken towards 1.3100.
US Dollar against the CHF dropped to 4-year lows on Tuesday but recovered to 0.9083. With strong selling pressure, the CHF has weakened.