News

Euro Inches Higher on Recovery Fund Progress

EUR

The Euro was firmer against peers during early trading hours of the week supported by rising prospects of reaching an agreement over the recovery fund. EU leaders are extending the negotiations for a fourth day (to continue later today at 14:00 GMT), trying to find a proper setup to deliver a recovery fund. A while ago, Bloomberg reported that EU hardliners are ready to accept 390 billion euros as grants and 360 billion euros as loans. The EURUSD rose to a four-month high of $1.1467, the EURAUD rallied to 1.6407, and the EURJPY inched higher to 122.97, the highest in almost six weeks.

USD

The dollar index, which measures the greenback against a basket of major currencies, drifted lower to 95.85 as investors favored riskier currencies. The progress made by European leaders to ensure a recovery fund boosted risk appetite. On the other hand, the prospects of further fiscal stimulus in the United States weighed on the dollar. The Republicans and Democrats are fighting over the size of the next stimulus bill that could range between 1 and 3 trillion dollars. The GBPUSD ticked higher to $1.2579, and the risk-sensitive AUDUSD rose to $0.7004.

Equities

Major US stock index futures started the week on a softer note as the US soaring covid19 cases continued to weigh on recovery hopes. The single-day cases are on record, states are warning of more drastic measures to be taken to stop the spread, which could disrupt the economic activity again. On the other hand, market participants are looking forward to the next round of fiscal stimulus, and the results of phase one trial from vaccine study by AstraZeneca and Oxford University. The Dow Jones Industrial Average futures dipped to 26323, the S&P500 futures eased to 3189, and Nasdaq futures dropped to 10544.

Metals

Gold prices edged higher for the sixth consecutive week, lifted by woes erupting from the growing coronavirus cases, and the implications on the global economic activity. The price of a gold ounce rose to $1811, the price of a silver ounce rallied to $19.40, after recording the highest weekly close since September 2016, and palladium futures held steady near $2060.

Oil

Oil prices continued to hover in a tight range near their highest levels since March awaiting fresh fundamental drivers. OPEC and its allies agreed to reduce production cuts in August as scheduled. However, if the virus continues to spread rapidly, it could force another lockdown, which would weigh on oil demand levels, urging oil producers to intervene again to stabilize the market. The West Texas Intermediate September delivery fell to $40.14, and Brent blend September delivery declined to $42.50.

Major Economic Events

GMT Country Event Expectation Previous

10:00

EZ

 German Buba Monthly Report 

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14:30

EZ

 ECB's Lane Speaks 

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15:10

UK

 BoE MPC Member Haldane Speaks 

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