IFX Market Report: Thursday 24th September 2020

The dollar continued to strengthen, marking the fourth straight day of gains as investors remained concerned about weak economic data and rising Covid-19 cases throughout Europe effecting the global economy as well as US political uncertainty.

Data released early in the morning showed business growth across the Eurozone had ground to a halt in September while PMI figures from the UK showed growth fell from a 6-year high of 59.1 in August to 55.7 in September. The UK figures were attributed to the end of government subsidies, but despite being lower than August the UK still recorded strong growth in the services and manufacturing sectors.

Data released later in the afternoon showed the US service sector, which accounts for more than two-thirds of the US economy slowed in September and with Federal Reserve speakers now appearing to be less dovish than expected, investors are flocking to the dollar.

The dollar index touched a high of 94.41 yesterday around 0.1% up on the high of the day before.

EURUSD moved lower as the day progressed from a high of 1.1718 to a low of 1.1659.

Euro and pound traders are also worried about the negotiations between the UK and EU. With less that 100 days to go, the markets are concerned about the chance of a no deal outcome as both sides seem to be digging their heels in.

The pound was well supported against the broadly stronger US dollar, GBPUSD opened at 1.2696 and rose for the majority of the day hitting a high of 1.2770.

GBPEUR also bucked the trend of the last couple of days and rose from an open of 1.0857 to reach a high of 1.0934 just before close. Whilst Brexit remains a hot topic, moves in either direction could remain muted as both currencies now appear to be affected in unison.

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