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Dollar weak

Dollar weak

GBP

A weaker US Dollar allowed Sterling to make gains on Monday with a further test of resistance above the 1.3100 area. Domestic economic concerns are keeping the Pound sentiment weak and the Euro advanced to highs near 1.1025 correction slightly.  Although caution remained a key element and trading volumes were low risk sentiment was stable which prevented much reason to sell the Pound.

IHS Markit financial conditions index declined to 40.8 for August from 41.5 the previous month with the sharpest decline in job security since 2011. Today’s UK-EU trade talks kick with dinner attended by UK chief negotiator Frost and EU counterpart Barnier. There were concerns that no major political decisions would be made until much closer to the deadline later in the year. Dollar weakness means the Pound opens near 1.3130 while the Euro edged lower to near 1.1050 as Sterling was resilient. 

 

USD

The New York Empire manufacturing index declined sharply to 3.7 for August from 17.2 the previous month and well below consensus forecasts of 14.5. New orders dipped into contraction territory with a sharp decline in unfilled orders. Overall confidence in the outlook remained buoyant despite a second successive monthly decline.

The August NAHB housing index strengthened to a record high of 78 from 72 the previous month and above consensus forecasts of 73. Mortgage delinquencies posted the sharpest quarterly increase on record which triggered fresh concerns over the banking sector which could also hamper the wider economy.Overall dollar demand remained weak with a lack of confidence in fundamentals.

Confidence in the US currency remained weak this morning with the currency index retreating to near 26-month lows with the Euro pushing towards the 1.1900 level. Markets remained wary over very low liquidity levels which could lead to choppy trading, but the US currency remained on the defensive. 

EUR

The Euro maintained a firm tone heading into the US session yesterday with the single currency continuing to edge higher as continued selling pressure mounts on the US currency. Overall Dollar demand remains weak with a lack of confidence in fundamentals and the Euro advanced to highs 1.18880 ahead of the European close with only a marginal correction later in the session as markets continued to punish our neighbours across the pond. 

As of writing, the Euro is trading around the 1.1895 mark against its US counterpart.

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