After a stunning rally yesterday, the U.S. dollar is in a more familiar mode this morning, weakening against most of its G10 counterparts.
Overview
The safe-haven dollar gained across the board yesterday as global equities had their worst day in months on new coronavirus fears, increasing demand for the greenback. Sentiment has again changed today despite continued warnings from health officials. Late yesterday, Houston officials said they were “getting close” to reimposing stay-at-home orders. European stocks are 1% higher and U.S. futures show American shares will recoup about a third of its losses from yesterday when markets open.
This morning’s economic docket is fairly light with only import and export prices for May and the preliminary University of Michigan consumer sentiment for June.
What to Watch Today…
- No Major Events Scheduled for Today
Complete Economic Calendar can be found here.
EUR
After slipping yesterday, the Euro regained some of its losses overnight before slipping somewhat in early trading. If the Euro can hold its gains today, it would have risen 12 of the past 14 sessions versus the greenback. The pair is 4.5% higher in the last month.
Today’s economic docket showed that euro-area industrial production fell a drastic 17.1% in April. The Euro may have found some support on more reports Germany is pressing ahead with its implementation of a 130-billion-euro stimulus package. German Chancellor Angela Merkel’s cabinet signed off on several initiatives today.
GBP
The British pound trudged higher today even after data showed that Covid devastated the country’s economy. The U.K. economy shrank a record 20.4% in April, adding to a 5.8% drop in March. Bloomberg News pointed out that the economy essentially lost 18 years of growth over two months.
The U.K. has the highest death toll in Europe. The human and the financial toll will likely put even more pressure on the U.K. government and the Bank of England to do more to support the economy which could eventually put downward pressure on the sterling,
