USDIndex, Daily
The narrow trade-weighted USDIndex edged out a one-week high at 93.71, making this the third consecutive trading day a higher high has been seen. A softer tone in the Euro has in part given buoyancy to the index while pushing EURUSD to a one-week low, at 1.1723. EURJPY concurrently rose about 40 pips to a peak at 124.75. USDJPY remained firm, but remained just shy of the one-week high seen yesterday at 106.21. AUDUSD ebbed back under 0.7150, leaving highs at 0.7185/86, though still remained net higher on the day, while AUDJPY pegged a four-day high. USDCAD ebbed to a four-day low at 1.3320, reflecting a modest degree of outperformance in the Canadian Dollar, which has been concomitant with oil prices edging out new highs. Front-month USOil futures printed a one-week high at $42.40.
Is the the Dollar etching out a recovery phase after recent out-performance and seven consecutive weeks of lows the wake of the July US jobs report, hopes of a new stimulus package and with new coronavirus cases now dropping sharply across the sun states?
UK jobs data provided very mixed and confusing reading. The claimant count jumped 94,400 in July, bringing the claimant count rate to a whopping 7.5%, from 7.2% in the previous month. The less timely ILO unemployment rate unexpectedly held steady at 3.9% in the three months to June, but at the same time employment dropped -220K during that period. This was the biggest rise in over a decade highlighting the impact of lockdown measures. Still, it is less than Bloomberg consensus expectations predicted and ties in with the general theme of “not as bad as feared” – with regard to the initial impact of virus measures. The question of course is what will happen when governments have scrapped support measures and the furlough scheme runs its course. Cable was capped at 1.3100 yesterday, before slipping to 1.3055 following the claimant data, and has since recovered over today’s pivot point (1.3060) to trade at 1.3075.
Next up today is the German and Eurozone ZEW Economic Sentiment index at 09:00 GMT.
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Stuart Cowell
Head Market Analyst
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