Dollar tests 2018’s lows. Euro consolidates above 1.1920
With inflation, the dollar’s domestic purchasing power could erode faster. In that case, it would have a hard time maintaining its purchasing power in the foreign exchange market in the long term.
The Euro is trading higher against the dollar on Monday for the second day in a row. The primary catalyst is the greenback’s weakness, but so is the end of the summer and the corresponding rebalancing of capital.
This typical end-of-summer portfolio rebalancing comes when the dollar is under a lot of pressure. This happens due to the Federal Reserve’s latest decisions, the US central bank.
Besides, investors are confident that the economic data in Australia with the interest rate decision of the Reserve Bank, as with inflation in Europe, and finally, the employment report in the US will offer greater volatility.
The EUR/USD is trading at 1.1936 right now, increasing 0.30 percent on the day. The uptrend will most likely continue at least until Friday.
On the other hand, the advance of COVID-19 continues. According to the latest update of the COVID-19 Dashboard from Hopkins University, the number of confirmed coronavirus cases worldwide has already exceeded 25 million. The death toll has reached almost 847 thousand.
The US has been affected the most, with approximately 6 million infected cases and almost 183 thousand deaths.
Overnight, China reported a non-manufacturing PMI of 55.2 in August, against the expected decline from 54.2 in July to 52.1.
The Chinese manufacturing PMI fell slightly from 51.1 in July to 51.0 in August. The market was expecting a more significant drop to 48.7. This is good news because it means that the index continues to expand.
On the other hand, inflation in Germany has shown signs of concern after reporting a 0.1 percent decline year-on-year in August.
The Reserve Bank of Australia’s interest rate decision will be made Today.
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