News

Dollar Extends Losses as Risk-On Sentiment Prevails

USD

The dollar index, which measures the greenback against a basket of major currencies, extended declines falling to 94.78, the lowest since early March as investors continued to favor riskier currencies. The recent growing chances of a significant round of stimulus weighed on the buck. Moreover, the fact that other top countries were able to control the Covid19 outbreak, and drive the economic activity back on track, made their currencies more attractive. The dollar could find some support if the US-China tensions continue to escalate. China has until tomorrow to close its consulate in Houston following accusations of spying. The EURUSD rose to $1.1598, the highest since October 2018, the AUDUSD advanced to $0.7183, and the NZDUSD rallied to $0.6689.

Equities

Major US stock index futures extended upside rally adding to previous gains supported by enhanced risk appetite. Investors are optimistic about a possible vaccine, especially as the United States announced that it is paying Pfizer and BioNTech $2 billion for 100 million doses of vaccine. On the other hand, the strong corporate earnings are easing woes over the impact of covid19 on top corporations. A key downside risk to this upside rally would be an escalation in tensions between China and the United States. The Dow Jones Industrial Average futures rose to 27012, the S&P500 futures ascended to 3283, and Nasdaq futures recovered to 10937.

Gold

Precious metals prices continued to march higher, backed by bets of further stimulus. The monetary and fiscal stimulus applied to ease the impact of Covid19 on top economies made the non-yielding bullions attractive. The price of a gold ounce rose to a fresh nine-year peak of $1876, the price of a silver ounce hovered around $23, and palladium futures ascended to $2237.

Oil

Oil prices inched higher amid improved risk sentiment, discarding the buildup in inventories. The US Energy Information Administration reported a rise of 4.892 million barrels in US inventories. The West Texas Intermediate crude September delivery rose to $42.15, and Brent blend September delivery rallied to $44.54.

Major Economic Events

GMT Country Event Expectation Previous

12:30

US

Initial Jobless Claims

1300

1300

14:00

EZ

Consumer Confidence (Jul)

-12.0

-14.7

22:45

NZ

Trade Balance (MoM)(Jun)

450

1253

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