Foreign Currency Update

Foreign Currency Update.

The US Dollar has been largely flat in terms of its value on the international markets. The DXY Dollar index, the index that measures the U.S. Dollar’s value against a basket of major currencies, fell from 94.6 to 93.6 in a choppy month.

With the U.S. Elections coming up volatility is expected o increase but at the same time the dollar will likely not make a significant directional move one way or the other. A look at stock market activity may give some guidance as to the future dollar outlook. A protracted outcome to the U.S. election could lead to more volatility in both the currency markets and the stock markets. Watch for any oversized stimulus that may weigh on the dollar in the medium term. Against the Thai Baht, the USDTHB rate fell from 31.69 to 31.25 in keeping with the weakening Dollar, although both moves are quite muted.

The British Pound has had quite a lot of news behind it in recent weeks. A rally to 1.3061 against the US Dollar faded and the Pound dropped to 1.2909. A temporary failure of Brexit talks could have been a major factor, but equally a significant rise in Corona cases in the UK could also be behind the move. The fact that the Brexit talks did not send the Pound lower could be an indication that the news was already priced in and so an upside surprise could be in store, depending on further discussions. Against the Thai baht, the Pound rose to a high of 40.99 from 40.38 before falling back to 40.91

The Japanese Yen actually weakened against the U.S. Dollar, moving from 104.61 to 105.39 even though the Dollar has also given up some of its value. The likely reason is a recent stock market surge, which often inspires a risk-off trade in the Yen. Against the Thai Baht, the Yen fell from 0.2970 to 0.2936 illustrating the compounded weakness of both the US dollar and the Japanese unit.

The Russian Ruble continued to weaken against the US Dollar moving from 75.29 to hit 79.59 before dropping back slightly to 77.76. The trend could be set for more near term weakness. The Ruble’s continued move was mirrored in the RUB/THB rate, which fell from 0.415 to 0.401, briefly dipping below the key 0.400 mark.

The Euro, which had mounted a monster rally against the US Dollar from 1.08 to nearly 1.20 over the last few months continued to give up a small part of those gains and moved from 1.1817 to 1.1727, in largely choppy trade. News of more possible ECB stimulus on the cards may have lead to the modest decline. Against the Thai Baht, the Euro moved from 36.83 to 37.10 and then back to 36.51.