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Tue 19 Oct 2021 09:54GMT

Markets Calm and Return to Riskier Assets as US President Trump Discharged from Hospital

Published: 6 Oct at 4 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada,

Pound Sterling (GBP)
The Pound saw yet another volatile session today. For much of the day it was pushed lower by concerns over pandemic-influenced job layoffs. In the afternoon however, Sterling was boosted by reports that the latest UK-EU Brexit negotiations had been productive, and that big progress had been made.

No notable UK data will be published tomorrow. This will leave the Pound to be once again driven by rival currency strength and developments in Britain’s Brexit and coronavirus situations.

Euro (EUR)
Today’s Eurozone data came in stronger than expected, helping the Euro to sustain some gains against the Pound. The Euro also benefitted from weakness in its rival the US Dollar, as investors became more willing to take risks again.

More comments from European Central Bank (ECB) President Christine Lagarde are expected tomorrow. Aside from this though, the Euro is more likely to be driven by strength in the US Dollar.

US Dollar (USD)
The US Dollar was generally unappealing today. As US President Donald Trump was discharged from hospital, markets were more willing to take risks and the safe haven US Dollar was weaker as a result.

The focus tomorrow will be the Federal Reserve meeting minutes report, due tomorrow evening. Of course, any surprising developments in the health of US President Donald Trump could also influence the US Dollar.

Australian Dollar (AUD)
The Australian Dollar tumbled today. The Reserve Bank of Australia (RBA) indicated that Australian monetary policy was likely to loosen. While this was expected, the prolonged dovish outlook is weighing on Australian Dollar appeal.

If the ‘Aussie’ calms from Reserve Bank of Australia speculation though, it could climb in reaction to the market’s higher risk-sentiment this week. Of course, fresh global market uncertainty would have the opposite effect.

New Zealand Dollar (NZD)
The New Zealand Dollar saw mixed movement today. It was weighed by association with the Australian Dollar, but benefitted from better market risk-sentiment as well.

This week will be quiet for New Zealand data. As a result, the New Zealand Dollar will be driven more by developments in global market and trade-sentiment, such as US coronavirus and political news.

Canadian Dollar (CAD)
The Canadian Dollar saw fairly strong performance today, as it benefitted from rebounding market sentiment. As US President Donald Trump was discharged from hospital on Monday, investors became more willing to take risks again. This boosted prices of oil, as well as the oil and trade-correlated Canadian Dollar.

Tomorrow will see the publication of Canada’s September Ivey PMI report. This data is unlikely to be hugely influential though, and Canadian Dollar movement will likely continue to be driven by market risk and trade sentiment, as well as oil prices.
As of Tuesday, 6th October 2020, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.0974, GBP USD exchange rate was 1.2876, GBP AUD exchange rate was 1.8141, GBP NZD exchange rate was 1.9565, and GBP CAD exchange rate was 1.7152.
Dominic Lee About Author: (473 Posts)With over ten years experience as an economist – including four years spent as a chief economist with a major currency broker – Dominic has acquired a wealth of knowledge which he uses to forecast market movements. Dominic now works as an independent business advisor and writes for several financial publications.

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