Forex Today: Gold steals the show, dollar keeps falling amid US-China feud, economic woes
- 27th July 2020
- Posted by: Hakeem
- Category: FOREX LATEST NEWS DAILY, FOREX MARKET ANALYSIS
Here is what you need to know on Monday, July 27:
Two main themes have played out kicking-off this week on Monday, the Gold surge to fresh all-time highs and the continued sell-off in the US dollar across its main competitors.
The market mood remained tepid, in light of the worsening US-China diplomatic ties after Beijing retaliated for being ousted from the Chinese consulate in Houston. US Secretary of State Mike Pompeo called for “a new alliance of democracies” to oppose China’s “new tyranny”.
Meanwhile, growing economic concerns amid a continued rise in the coronavirus across the US undermined the US currency. According to data compiled by Johns Hopkins University, global confirmed coronavirus infections passed 16.05 million on Sunday, with 4,178,730 in the US.
Additionally, the deadlock over the fiscal stimulus in Washington exacerbated the pain in the greenback. White House Chief of Staff Meadows announced late Sunday that WH and Senate Republicans have reached ‘agreement in principle’ on the next coronavirus aid bill. US Treasury Secretary Mnuchin said the package will contain extended unemployment benefits with a 70% wage replacement.
Gold outperformed among all other major asset classes, as investors flocked to the traditional safety-bet. The yellow metal rallied nearly 2% in Asia to fresh record highs of $1944.76. Silver tagged along and reached a new 6.5-year high of $24.25.
S&P 500 futures shrugged-off the US-China feud and jumped back above the 3200 level while Asian stocks were a mixed bag stepping into the Fed week.
EUR/USD reached fresh 22-month highs above 1.1700, as the shared currency continues to benefit from the EU recovery fund deal and upbeat Markit’s preliminary PMIs for July.
GBP/USD is off the 4.5-month high of 1.2857, still trades with moderate gains above 1.2800. The pound appears to ignore the looming Brexit uncertainty, underpinned by solid fundamentals and broad dollar weakness.
USD/JPY has faced a double whammy, with the dollar break down and the yen strength due to increased safe-haven demand. The spot hit a four-month low just under 105.50.
Commodity-currencies cheered gold’s upsurge, dollar’s sell-off and a rebound in the S&P 500 futures. AUD/USD bounced-back to 0.7150 amid upbeat comments from RBA’s Kent and robust Chinese Industrial Profits while USD/CAD extended the drop below 1.3400 despite the weakness in WTI prices.
Cryptocurrencies are broadly mixed, with Bitcoin holding up firmly above $10K mark.