Friday, October 23, 2020

Does anyone know why the main currency is rising again?

 Major currency trading again showed gains in the European session while the US dollar depreciated lower, as investors continued to monitor developments on US fiscal stimulus talks.

The dollar index traded 0.15% lower against a basket of major currencies, heading for weekly losses after falling to a seven-week low on Wednesday.

The next market focus will be on the publication of US manufacturing and services PMI data tonight.

The euro traded higher at the start of the European session after being backed by manufacturing data which unexpectedly showed stronger growth since April 2018 in October.

However, the sharp drop in business activity in France and Germany that showed the impact of the second wave of Covid-19 on the bloc's two largest economies, has added to market concerns.

While the pound rose slightly following the depreciation of the US dollar, price movements were relatively limited due to weak manufacturing and services PMI data.

Meanwhile, the UK is reported to have signed a post-Brexit trade agreement with Japan. However, the pound failed to react to the report.

On the other hand, the Aussie dollar and the New Zealand dollar rose higher during the European session, each recording an increase of over 1% for the week due to the weakness of the USD.

Commodity currencies, the Canadian dollar also rose during the European session with crude oil trading also recording a modest increase, following the depreciation of the US dollar.