Foreign Exchange Update 31st August 2020
Reports at the start of the week are expecting the U.S. Dollar to undergo another loss this month, having made another loss for the fourth consecutive month. The currency was affected by last week’s speech by Federal Reserve Chair Jerome Powell who suggested a policy shift on inflation. As a result, inflation would be pushed higher in order to hold interest rates lower.
Analysts claimed, “Even if U.S. central bankers are likely to be pleased about the interpretation of their measures, it is not good news for the dollar. If one expects the domestic purchasing power of the dollar to be eroded more quickly, it is difficult to assume that it will maintain its purchasing power on the FX market in the long run.”
The EUR/USD was being traded at 1.19 at the time of writing, ahead of the release of preliminary German inflation figures. Additionally, U.S. Non-Farm Payrolls are also yet to be published.
On the other hand, the European currency is set to see further gains in August. This comes amid the rise in coronavirus cases in the Eurozone, with Spain and France’s situation worsening. However, hopes for a vaccine are aided stocks to be pushed higher.
The British Pound was impacted by the new taxes as well as fears of a pause in Brexit talks, halting the GBP/USD pair from reaching a yearly high. The pair currently trades above the 1.33 mark.
On Monday, the Australian Dollar was being traded 0.2% lower, whereas the New Zealand Dollar reached a post-COVID high of 0.6749.