Dollar stops falling, markets watching Congress
JULY 28, 2020
The U.S. Dollar’s sinking is taking a break as FX flows slowed down overnight as the coronavirus started reappearing in regions it was felt to have been mostly defeated if not contained.
Even in Beijing they are seeing cases after stellar three weeks of progress, adding to investors’ concerns over the global economy. Today and tomorrow, the markets will be somewhat guided by pharmaceutical earnings reports, but action will pick up significantly once the Fed speaks on Thursday and we have more productivity data in our hands.
Overall, the globe right now is facing a doubtful future especially since vaccine advancement has been slow and nothing is guaranteed in terms of distribution or effectiveness. As cases rise in places that would be popular destinations otherwise, we are seeing more diplomatic woes with now Spain and the U.K. arguing over travel restrictions. Diplomacy with China will be watched as well along with any development that may come from the U.S. Congress chambers about a deal to help ease the financial burden.
What to Watch Today…
- No major events scheduled today
Complete Economic Calendar can be found here.
The shared currency finally stopped rising after reaching its best level in two years against the buck. Seems like market movers are finally finding some resistance after the initial and ongoing excitement over the EUs recovery package started to fade. As a measure of prudence, the European Central Bank has asked banks not to pay out dividends throughout the end of the year. We shall watch as the EU also participates in negotiations with U.K. counterparts over a post-Brexit trade deal.
The Pound remains buoyant despite slow FX flows following good data in the form of Retail Sales. Indeed, the CBI Retailing Reported Sales produced a positive reading indicating expansion and an end to the collapse in business activity in this sector after months of pandemic worries. Although there has been some criticism of Boris Johnson’s overall response, the reality is that the economic re-opening went better than expected and the Chancellor of the Exchequer, Rishi Sunak, has acted in an efficient fashion to protect the corporate sector. Trade is the main question for the future, but Sterling has reason to remain rangebound