The U.S. dollar was under pressure yesterday and the trend continued overnight as risk-on trading was widespread.
Overview
Equity markets from Asia to Europe were all in the green this morning and American futures point to another higher open. As a result, the U.S. dollar index is 0.6% lower.
Earnings season continues and will continue to be important for the greenback as currency markets have been tied to risk trading.
There is some stale February data slated for release early this morning which we will overlook. April readings of both the Conference Board confidence and the Richmond Fed manufacturing data will hold more clout and are due out at 10 a.m. The Federal Reserve will end their two-day meeting tomorrow afternoon. Fed President Jerome Powell will hold a press conference following the policy announcement. We do not except any major changes in policy.
What to Watch Today…
- No major events scheduled for today.
Complete Economic Calendar can be found here.
You’re Invited…
THURSDAY | WEBINAR | FACC: MANAGING FX AMIDST A PANDEMIC @ 1pm EST
THURSDAY | WEBINAR | Cocktails & Currencies @ 4pm EST
>> Submit an FX Question for our Traders before Happy Half Hour
EUR
The EUR/USD is up for a second day, pushing off its monthly lows. The common currency is benefiting from cautious optimism as new infections and deaths dip in a number of European countries. New cases in Germany fell below 1,000 for the first time in over a month and Italy reported the lowest level of new infections in nearly two months. France, Spain and Italy all have plans to begin reopening their economies in the coming weeks.
While the Euro remains near the bottom of its recent range, we do feel the common currency may be able to advance slightly over the coming weeks. However, it is our contention that the greenback will remain king. The European Central Bank concludes their meeting on Thursday
CAD
The Canadian dollar and other commodity-backed currencies such as the Mexican peso and Norwegian krone all have enjoyed gains versus the greenback despite another collapse in the price of oil. June futures for crude fell over 20% before rebounding. At the time of writing June contracts are down 9%. Today’s move was more technical as S&P Dow Jones said it will roll all of its WTI contracts for June into July on worries that the June contract would trade negative. That is exactly what happened last week to May contracts.
Oil is down 80% this year as coronavirus threw cold water on demand and pledges to slash supply have been insufficient, putting serious pressure versus commodity-based currencies. For example, the Norwegian krone is down over 17% in 2020.
