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US dollar rallies from lows, pound static

currency-newsUS dollar rallies from lows, pound static
The US dollar came out on top at the start of this week’s session, bouncing back from its recent lows as investors sought to pick up the currency at bargain prices.
Meanwhile, the pound is stuck in a narrow range this morning, with GBP/EUR muted at €1.1113 and GBP/USD flat at $1.3089. GBP/CAD is rangebound at C$1.7500, while GBP/AUD and GBP/NZD hold steady at AU$1.8334 and NZ$1.9785 respectively.
Today the focus will remain on the US dollar. Will an uptick in factory orders help boost USD exchange rates or will the currency be undermined by optimism if US lawmakers are able to reach a stimulus deal?

What’s been happening?

The US dollar mounted a comeback on Monday, with investors flocking to the currency after it drifted into oversold territory last week.
This upswing in USD exchange rates was also triggered by souring market risk appetite, with coronavirus concerns and US-China tensions bolstering the appeal of the safe-haven currency.
Further buoying the appeal of the ‘greenback’ was the latest ISM manufacturing PMI, which beat expectations and reported that US factory activity rose to a 16-month high in July.
The euro, meanwhile, traded in a narrow range at the start of this week’s session as demand for the single currency remained limited in light of last week’s gloomy Eurozone GDP figures.
The euro was able to avoid any additional losses however following the publication of the Eurozone’s manufacturing PMI as July’s finalised figures were revised slightly higher.
At the same time, the pound drifted lower yesterday following reports the UK government could move to rapidly lockdown London if coronavirus cases continue to rise.
Sterling faced additional pressure after the UK’s manufacturing PMI for July was revised slightly lower in its final release.

What’s coming up?

Looking ahead, the latest US factory orders will be the most influential data release today, with another strong expansion in order growth potentially lifting the US dollar.
However, any upside in the ‘greenback’ could prove limited if Republicans and Democrats finally reach a deal on the next round of fiscal stimulus and help bolster market optimism.
For EUR investors the focus will be on the latest Eurozone PPI figures, with a bump in producer prices in June potentially offering the euro some support.
Last but not least, the pound may struggle to find any strong directional bias today in the absence of any notable UK economic data.
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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