Pound rises and Euro halts before FOMC
JULY 29, 2020
The U.S. Dollar is trading in mixed ranges, preventing further losses against Euro and some majors, but losing over half a percent of value against the Pound and Mexican Peso.
For the most part, the buck has settled that it is on a weakening trend before the Federal Reserve meeting and press conference today at 2PM. Equity markets welcome any idea of a more committed Fed, especially as it explains its new role in directly lending to have a positive effect on business flows.
Oil prices look optimistic as reports of inventory falling last week leave more room for production as demand keeps increasing. The Mexican Peso has been a beneficiary now trading at its strongest level since the start of June. We shall see how today’s busy Fed talk will influence an FX market that is now digesting new issues with COVID-19 and a slower recovery than desired in China, who’s economic momentum seems to have stalled since July.
What to Watch Today…
- No major events scheduled today
Complete Economic Calendar can be found here.
The Euro remains strong having reached its best level in about two years this week. The shared currency will be tested tomorrow and Friday as a slew of data on confidence and Gross Domestic Product is released.
Today’s statistics came mostly from Spain and Italy with Retail Sales, Wages, and Retails Sales all showing major improvement in the months of June and July. A Euro-zone that gets away from distractions and contractions shall see further prosperity and we believe it could improve Euro only slightly but guarantee its high-level range.
The Pound is trading at its strongest level in four months, climbing somewhat rapidly this week based primarily on a loss of appetite for the dollar as COVID-19 continues its havoc. U.K. pharmaceutical firms Glaxo-Smith-Kline and Sanofi have signed a deal with the government to guarantee distribution of 60MM vaccinations. There is not much on schedule in terms of data for Britain the next few days, but any doubts that may emerge from European GDP and our own domestic figures could add to Sterling’s steam.