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Upbeat market mood drags on the US dollar

currency-newsUpbeat market mood drags on the US dollar
The currency market was driven by improving market sentiment on Thursday, leaving the US dollar to weaken as investors flocked to its peers.

Meanwhile, the pound is stuck trading in a narrow range this morning, with GBP/EUR flat at €1.1056 and GBP/USD muted at $1.3055. GBP/CAD is rangebound at C$1.7272, while GBP/AUD and GBP/NZD hold steady at AU$1.8252 and NZ$1.9962, respectively.

Coming up today, the focus is likely to be on the latest US retail sales figures. Will slowing retail sales growth weigh on the US dollar this afternoon?

What’s been happening?

The US dollar trended lower during yesterday’s European session as an improving market mood limited the appeal of the safe-haven ‘Greenback’.

This broad improvement in market sentiment was partly driven by the latest US jobless figures, as unemployment claims dropped below 1 million for the first time in 21 weeks at the start of August.

This dip in the US dollar in turn helped to bolster demand for the euro yesterday due to the negative correlation between the pairing.

However, tempering these gains were concerns over renewed US-EU trade tensions as the US confirmed it would not be lifting tariffs against $7.5bn worth of EU goods in a long running spat over state subsidies for Airbus.

The pound, meanwhile, also benefitted from the improved market mood, climbing against most of its peers despite the gloom still hanging over the UK economy.

What’s coming up?

In the spotlight in today’s session will be the publication of the latest US retail sales reading.

Economists forecast figures will have begun to normalise last month, with sales expected to slow from 7.5% to a more modest 1.9%, although the positive reading is still likely to be welcomed by markets.

Also of note for USD investors will be this afternoon’s consumer sentiment reading. Will another improvement in household sentiment reflect well on the US dollar?

In the Eurozone, the focus looks to be on the bloc’s latest employment figures, with the euro potentially struggling if employment growth slowed as sharply as expected in the second quarter.

Meanwhile, the pound may struggle for direction today amidst a lull in notable data, instead any notable coronavirus or Brexit developments could drive movement at the end of the week.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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