GBP/USD Price Forecast – British Pound Testing Major Figure

The British pound fell a bit during the trading session on Monday to kick off the week, reaching down towards the 1.30 level where buyer step in and pick that up a bit. At this point, it is still an open-ended question as to whether or not we can hold the 1.30 level, but obviously we are still in an uptrend regardless of what happens next. With that in mind I like the idea of buying dips but lied, I wish this dip with a little bit deeper because it gives you more room to run.

GBP/USD Video 04.08.20

Nonetheless, the market is looking very likely to find buyers sooner rather than later, and if we can take out the shooting star from the Friday session that would be a very strong sign. I am not a seller, and if we break down below the 1.30 level then I will simply look to pick up the British pound closer to the 1.2650 level, perhaps even the 1.2750 level.

The British pound has been extraordinarily strong, and I think that will continue to be the case as the Federal Reserve continues to weaken the US dollar in general. With this, it is almost as if Brexit is never going to be an issue, but I digress. At this point it is obvious that the FX markets are not paying attention to Brexit, and solely paying attention to the Federal Reserve and its loose monetary policy going forward.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Eases Back After a Strong Performance in July

The British pound was the best performer among the seven major currencies in July, gaining 5.5% against the greenback.

The dollar was under pressure throughout the month, weighed by optimism that central banks and governments would continue to support the global economy. The greenback is known as a safe-haven currency and often underperforms when the market’s appetite for risk is higher than usual.

In the UK, the economy took a firm step in a positive direction as lockdown restrictions were eased in July and businesses started to reopen.

The latest PMI report, released earlier today, showed the manufacturing sector growing for a second consecutive month. Data on Friday revealed a strong rebound in the services sector and a sharp push higher in UK house prices.

On the other hand, ongoing talks in reaching a trade deal with Europe have not been going so well. Last month, several media outlets reported that the UK government expects an agreement won’t be reached by the deadline. Further, the UK waived its right in June to extend the transition and negotiating period beyond December.

Later in the North American session, the US will release its latest PMI figures for the manufacturing sector.

Technical Analysis

GBPUSD Monthly Chart

GBP/USD trades about half a percent lower ahead of the North American open on Monday. The pair reached a high of 1.3170 last week, stopping short of testing major resistance at 1.3262 seen on a monthly chart.

Considering the recent upward momentum, buyers are likely to support the pair on near-term dips. But at the same time, the risk to reward does not appear all that favorable for buyers with a longer-term view since resistance at 1.3262 has held the pair lower for more than two years.

Friday’s daily candle suggests some exhaustion that could cap near-term rallies. Today’s daily close will be important. A close near Thursday’s open, around 1.3000 would result in the formation of a reversal candlestick pattern on a daily chart.

Bottom Line

  • GBP/USD has pushed slightly lower after an impressive gain in July.
  • The decline on Friday ended a 10 consecutive day bullish streak.
  • The pair is weighed by a dollar recovery as the greenback is seen advancing against its major counterparts after hitting a two-year low on Friday.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Daily Forecast – U.S. Dollar Tries To Gain More Ground

GBP/USD Video 03.08.20.

U.S. Democrats And Republicans Fail To Reach Coronavirus Aid Package Deal

GBP/USD trades near 1.3100 as the U.S. dollar is mostly flat against a broad basket of currencies amid continued negotiations about the new U.S. coronavirus aid package.

The U.S. Dollar Index has stabilized near 93.5 after rebounding from recent lows at 92.5. Meanwhile, Republicans and Democrats continued their negotiations during the weekend but failed to reach a deal.

According to White House Chief of Staff Mark Meadows, Republicans wanted to extend some federal unemployment benefits while continuing negotiations on the whole package but Democrats wanted a comprehensive deal.

He also added that he was not optimistic that negotiations would successfully conclude in the near term.

Failure to extend special unemployment benefits poses risks for consumer activity which is the main driver of the U.S. economy. On the other hand, excessive money-printing could put additional pressure on the U.S. dollar and its status as the world’s main reserve currency.

Today, traders will have to digest UK Manufacturing PMI and U.S. Manufacturing PMI reports for July.

UK Manufacturing PMI is projected to increase from 50.1 in June to 53.6 in July.

In the U.S., Manufacturing PMI is expected to grow from 49.8 to 51.3. Numbers above 50 show expansion.

Manufacturing was not hit as hard as services during the current crisis so there’s a good chance that today’s data will be optimistic and provide some additional support to riskier assets.

Technical Analysis

gbp usd august 3 2020

GBP/USD tries to stabilize near 1.3100 following the major upside move.

In case GBP/USD manages to settle above 1.3100, it will have a good chance to test the nearest resistance level at 1.3200.

On the support side, the nearest support level is located at 1.3070. GBP/USD has already made an attempt to settle below this level but this attempt was unsuccessful.

If GBP/USD settles below 1.3070, it will head towards the next support level at 1.3020.

Currently, GBP/USD continues to move in a rather tight upside channel, and the upside trend remains intact.

However, RSI is still in the overbought territory, suggesting that risks of correction remain elevated.

For a look at all of today’s economic events, check out our economic calendar.

The COVID-19 Stimulus Package and Manufacturing PMIs Put the Dollar and EUR in Focus

Earlier in the Day:

It’s was a busy start to the day on the economic calendar this morning.  The Japanese Yen and the Aussie Dollar were in action, with economic data from China also in focus.

Away from the economic calendar, COVID-19 and the U.S stimulus package continued to be an area of focus.

Looking at the latest coronavirus numbers

According to figures at the time of writing, the number of new coronavirus cases rose by 249,532 to 18,231,469 on Sunday. On Saturday, the number of new cases had risen by 250,087. The daily increase was lower than Saturday’s rise while up from 213,347 new cases from the previous Sunday.

Germany, Italy, and Spain reported 623 new cases on Sunday, which was down from 707 new cases on Saturday. On the previous Saturday, 663 new cases had been reported.

From the U.S, the total number of cases rose by 50,702 to 4,813,647 on Sunday. On Saturday, the total number of cases had increased by 60,171. On Sunday, 26th July, a total of 56,130 new cases had been reported.

For the Japanese Yen

Finalized GDP numbers for the 1st quarter remained unchanged from 2nd estimates. In the 1st quarter, the Japanese economy contracted by 0.6%, following a 1.9% contraction in the 4th quarter.

On an annualized basis, the economy contracted by 2.2%, which was also in line with 2nd estimates. In the 4th quarter, the economy had contracted by 7.3%.

The Japanese Yen moved from ¥105.858 to ¥105.844 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.07% to ¥105.90 against the U.S Dollar.

For the Aussie Dollar

The AIG Manufacturing Index rose from 51.5 to 53.5 in July.

According to the July Survey,

  • The sector expanded for a 2nd consecutive month, a first since October of last year.
  • The food & beverage and machinery & equipment sectors delivered much-needed support in the month.
  • In spite of the expansion, there was continued weakness across the other sectors.
  • Production, employment, supplier deliveries, and finished stocks expanded at a faster rate than in June, however.

The Aussie Dollar moved from $0.71412 to $0.71423 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.14% to $0.7133.

Out of China

In July, the Caixin Manufacturing PMI rose from 51.2 to 52.8. Economists had forecast a rise to 51.3.

According to the July survey,

  • New business from overseas fell at the slowest rate in 6-months, as new orders rose at the quickest pace since Jan-11.
  • Companies also reported the quickest expansion in output since January 2011.
  • Output expanded for a 5th consecutive month, driven by greater client demand as the economic recovery gathered pace.
  • Manufacturers ramped up their buying activity, the rate of expansion the most marked in seven-and-a-half years.
  • In spite of a rise in backlogs and new orders, firms cut staffing levels again in July.

The Aussie Dollar moved from $0.71303 to $0.71366 upon release of the figures.

Elsewhere

At the time of writing, the Kiwi Dollar up by 0.02% to $0.6630.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar. Key stats include July manufacturing PMI figures for Spain and Italy.

Finalized manufacturing PMIs are also due out of France, Germany, and the Eurozone.

Barring a marked revision to Germany’s numbers, we would expect Italy and the Eurozone’s PMIs to have the greatest impact.

Following some quite dire 2nd quarter GDP numbers last week, a further pickup in manufacturing sector activity would be welcome.

At the time of writing, the EUR was down by 0.07% to $1.1770.

For the Pound

It’s a relatively quiet day ahead on the economic calendar. July’s finalized manufacturing PMI is due out later this morning.

Barring any revisions, however, the PMI should have a muted impact on the Pound.

Chatter on Brexit and market risk sentiment will influence, as will updates on the latest COVID-19 outbreak.

At the time of writing, the Pound was up by 0.02% to $1.3088.

Across the Pond

It’s a relatively busy day ahead for the U.S Dollar. July’s ISM Manufacturing PMI and finalized Markit Manufacturing PMI figures are due out.

Expect the ISM figures to have the greatest impact on the day. The employment and new orders sub-indexes will likely garner plenty of interest.

Away from the calendar, the focus will remain on Capitol Hill and the progress of the COVID-19 stimulus package.

At the time of writing, the Dollar Spot Index was up by 0.16% to 93.499.

For the Loonie

It’s a quiet day ahead on the economic calendar, with no material stats due out to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands of market risk sentiment and the PMI numbers on the day.

At the time of writing, the Loonie was up by 0.03% to C$1.3408 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

The Week Ahead – COVID-19, Economic Data and US Politics in Focus

On the Macro

It’s a busier week ahead on the economic calendar, with 59 stats in focus in the week ending 7th August. In the week prior, just 57 stats had been in focus.

For the Dollar:

It’s another busy week ahead on the economic data front.

In the 1st half, the ISM’s July private sector PMIs, ADP nonfarm employment change figures, and June factory orders are in focus.

We would expect Wednesday’s ISM Non-Manufacturing PMI and ADP Nonfarm Employment Change to have the greatest impact.

The focus will then to Thursday’s initial jobless claims and Friday’s nonfarm payroll numbers and unemployment rate.

Following some disappointing weekly jobless claims figures and the rise in COVID-19 cases, the labor market figures will be key.

For the service sector, any contraction in July, following a jump in productivity in June, would also weigh on riskier assets.

The Dollar Spot Index ended the week down by 1.15% to 93.349.

For the EUR:

It’s also another busy week ahead on the economic data front.

On Monday and Wednesday, July’s manufacturing and services PMIs are due out of Italy and Spain.

Finalized PMIs are also due out of France, Germany, and the Eurozone.

With Spain seeing a spike in new COVID-19 cases, expect some attention to the PMIs. Ultimately, however, the Eurozone’s services and composite will likely have the greatest impact.

The focus will then shift German factory orders for June, due out on Thursday.

At the end of the week, Germany remains in focus, with June’s industrial production and trade figures due out.

Barring disappointing numbers, June retail sales figures for the Eurozone should have a muted impact on Thursday.

The EUR/USD ended the week up by 1.05% to $1.1778.

For the Pound:

It’s a relatively busy week ahead on the economic calendar. July’s finalized private sector PMIs are due out and will garner plenty of interest.

Expect any downward revision to the Services PMI on Wednesday to have the greatest impact.

On Thursday, the focus will then shift to the BoE. More action is expected and the Bank may consider an extension to the suspension of banks paying dividends and buybacks.

While the BoE is in action, we can also expect any further updates on Brexit to also influence in the week.

The GBP/USD ended the week up by 2.27% to $1.3085.

For the Loonie:

It’s a relatively busy week ahead on the economic calendar.

On Wednesday, June’s trade figures are due out ahead of July employment numbers on Friday.

Expect the employment figures to have the greatest impact, however.

Barring dire numbers, the Ivey PMI for July should have a muted impact on the Loonie on Friday.

Away from the stats, COVID-19 and geopolitics will continue to influence crude oil prices and risk sentiment.

The Loonie ended the week up by 0.02% to C$1.3412 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a relatively busy week ahead for the Aussie Dollar.

At the start of the week, the Manufacturing Index figures are due out ahead of a busy Tuesday.

We would expect manufacturing PMIs from China, the EU, and the U.S to have a greater impact, however, on Monday.

The focus will then shift June trade and retail sales figures due out on Tuesday. Expect the retail sales figures to have the greatest impact. The RBA continues to rely on consumer spending to support the economy. Weak numbers will be a test for the Aussie Dollar.

For the week, however, the main event is the RBA monetary policy decision on Tuesday.

Following the spike in new COVID-19 cases, will the RBA remain optimistic about the economic recovery?\

Any dovish chatter and the Aussie Dollar could eye sub-$0.70 levels. At the end of the week, the RBA’s statement on monetary policy will also draw interest.

The Aussie Dollar ended the week up by 0.53% to $0.7143.

For the Kiwi Dollar:

It’s another quiet week ahead on the economic calendar.

2nd quarter employment figures are due out on Wednesday. The markets will likely be forgiving to an extent, with COVID-19 expected to have an impact on employment.

With economic data on the lighter side, private sector PMIs from China, the EU, and the U.S will influence.

Expect geopolitics and COVID-19 news to also have an impact in the week. Any signs of a slowdown in new cases globally and expect support to kick in.

The Kiwi Dollar ended the week down by 0.18% to $0.6629.

For the Japanese Yen:

It is a busy week ahead on the economic calendar.

Finalized 2nd quarter GDP and July’s manufacturing PMI numbers are due out on Monday.

The focus will then shift to July’s service PMI on Wednesday and June household spending figures on Friday.

While the stats will influence sentiment towards BoJ monetary policy, the Yen will remain at the mercy of COVID-19 and geopolitics.

The Japanese Yen ended the week up by 0.29% to ¥105.83 against the U.S Dollar.

Out of China

It’s a relatively busy week ahead on the economic data front.

July’s private sector PMIs are due out on Monday and Wednesday. Expect the figures to influence risk appetite in the week.

On Friday, July trade figures will also garner plenty of attention. While exports remain the main area of focus, any sizeable fall in imports would test risk appetite on the day.

Away from the economic calendar, any chatter from Beijing will also need monitoring.

The Chinese Yuan ended the week up 0.62% to CNY6.9752 against the U.S Dollar.

Geo-Politics

UK Politics:

Brexit will remain in focus. Talks are set to continue through August and September ahead of an EU Summit in October.

60 days may sound like a lot but when considering the lack of progress over 4-years…

A light economic calendar and Brexit chatter have provided the Pound with support. We may even see the markets brush off the chances of a hard Brexit.

Getting on with it seems to be the key desire now rather than dragging it out any longer. Either way, we’re not expecting Johnson and the team to give too much away…

U.S Politics:

Last week, the Republicans showed signs of fragmentation. As Presidential Election stress builds, we could see more fractures as Trump attempts to distract voters.

The immediate issue at hand, however, is the COVID-19 stimulus package. Any failure to deliver will weigh on the Dollar. Labor market conditions have not improved and the 2nd wave has shown little sign of slowing. A lack of benefits for the unemployed will raise more issues than a fall in household spending. We have already seen social unrest…

The Coronavirus:

It was yet another bad week, with the number of new COVID-19 cases continuing to rise at a marked pace.

From the market’s perspective, the 3 key considerations have been:

  1. Progress is made with COVID-19 treatment drugs and vaccines.
  2. No spikes in new cases as a result of the easing of lockdown measures.
  3. Governments continue to progress towards fully opening economies and borders.

Last week, we saw a number of countries including Hong Kong and the UK reintroduce containment measures. Hopes of progress towards a vaccine had limited the damage last week. In the week ahead, however, the numbers will need to ease off to avoid spooking the markets.

At the time of writing, the total number of coronavirus cases stood at 17,981,937. Monday to Saturday, the total number of new cases increased by 1,782,490. Over the same period in the previous week, the total number had risen by 1,531,149.

Monday through Saturday, the U.S reported 447,236 new cases to take the total to 4,762,945. This was up marginally from the previous week’s 417,070

For Germany, Italy, and Spain, there were 22,814 new cases Monday through Saturday. This took the total to 793,804. In the previous week, there had been 17,083 cases over the same period. Spain accounted for 16,101 of the total new cases in the week.

The Weekly Wrap – Economic Data, the FED, and Trump Sank the Dollar

The Stats

It was a busy week on the economic calendar, in the week ending 31st July.

A total of 56 stats were monitored, following the 41 stats from the week prior.

Of the 56 stats, 31 came in ahead forecasts, with 24 economic indicators coming up short of forecasts. Just 1 stat was in line with forecasts in the week.

Looking at the numbers, 19 of the stats reflected an upward trend from previous figures. Of the remaining 37, 35 stats reflected a deterioration from previous.

For the Greenback, it was a 6th consecutive week in the red. In the week ending 31st July, the Dollar Spot Index fell by 1.15% to 93.349. In the week prior, the Dollar had fallen by 1.57%.

The continued slide through the month of July left the Dollar Spot Index down by 4.15% for the month.

Dire economic data, the continued spread of COVID-19, and a dovish FED delivered the loss. Adding to the Dollar angst in the week was Trump’s Presidential Election delay tweet on Thursday…

According to a Reuters report, U.S Dollar net shorts surged to the highest in 9-years, delivering the largest monthly loss Since Sept-2010.

Looking at the latest coronavirus numbers

At the time of writing, the total number of coronavirus cases stood at 17,731,750 for Friday, rising from last Friday’s 15,930,779 total cases. Week-on-week (Saturday thru Friday), the total number of cases was up by 1,801,071 on a global basis. This was higher than the previous week’s increase of 1,741,556 in new cases.

In the U.S, the total rose by 454,463 to 4,702,774. In the week prior, the total number of new cases had risen by 478,299.

Across Germany, Italy, and Spain combined, the total number of new cases increased by 22,753 to bring total infections to 793,804. In the previous week, the total number of new cases had risen by 17,404. Spain alone reported 16,101 new cases in the week.

Out of the U.S

It was a busy week on the economic data front.

Key stats included July consumer confidence, the weekly jobless claims, and 2nd quarter GDP figures.

The stats were skewed to the negative. Consumer confidence deteriorated in July, as a result of the 2nd wave of the pandemic. Initial jobless claims increased for a 2nd consecutive week, with the U.S economy contracting by 32.9% in the 2nd quarter.

At the end of the week, July consumer sentiment figures were also revised down.

There were some positives, however. Durable and core durable goods continued to rise in June.

Chicago’s PMI returned to expansion in July, with personal spending rising for a 2nd consecutive month in June. These were good enough to give the Dollar much-needed support at the end of the week.

In the equity markets, the NASDAQ and S&P500 rose by 3.69% and by 1.73% respectively. The Dow bucked the trend, however, falling by 0.16%.

Out of the UK

It was a particularly quiet week on the economic calendar, with no material stats to provide the Pound with direction.

A lack of economic data contributed to the upside in the Pound that benefitted from Dollar weakness. News of the government reintroducing lockdown measures in the North weighed at the end of the week, however.

In the week, the Pound rallied by 2.27% to $1.3085 in the week, following on from a 1.80% gain from the previous week. The FTSE100 ended the week down by 3.69%, following on from a 2.65% loss from the previous week.

Out of the Eurozone

It was a busy week on the economic data front.

In a quiet 1st half of the week, Germany’s IFO Business Climate Index figures for July provided support on Monday.

The focus then shifted to 2nd quarter GDP numbers. France, Germany, and the Eurozone reported particularly dire 2nd quarter numbers.

The German economy contracted by 10.1%, the French economy by 13.8%, and the Eurozone economy by 12.1%.

It wasn’t enough to send the EUR into the red, however, as the U.S delivered darker numbers.

For the week, the EUR rose by 1.05% to $1.1778, following a 2.00% rally from the previous week. A 0.58% pullback on Friday limited the upside for the week.

For the European major indexes, it was another bearish week. The DAX30 slid by 4.09%, with the CAC40 and EuroStoxx600 falling by 3.49% and by 2.98% respectively.

For the Loonie

It was a quiet week on the economic calendar.

Economic data included May GDP and June RMPI numbers at the end of the week.

The stats were positive, with the Canadian economy expanding by 4.5% in May, following April’s 11.7% contraction. In June, the RMPI rose by a further 7.5%, following a 16.4% jump in May.

While the other majors lost ground against the Greenback on Friday, the stats delivered support at the end of the week.

The Loonie rose by 0.02% to end the week at C$1.3412 against the Greenback. In the week prior, the Loonie had rallied by 1.22% to C$1.3415.

Elsewhere

It was a mixed week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 31st July, the Aussie Dollar rose by 0.53% to $0.7143, while the Kiwi Dollar fell by 0.18% to $0.6629. A 1.04% slide on Friday, left the Kiwi in the red for the week.

For the Aussie Dollar

It was a relatively quiet week for the Aussie Dollar.

Inflation and private sector credit figures delivered mixed results in the week.

In the 2nd quarter, consumer prices slid by 1.9%, with prices down by 0.30% year-on-year.

Final delivery numbers were not much better, with the Producer Price Index falling by 1.20% in the 2nd quarter. Year-on-year, the index fell by 0.40%.

The numbers were better than forecasts, which propped up the Aussie Dollar.

Private sector credit disappointed, however, falling by 0.3% in June.

While the Aussie Dollar found support against the Greenback, the latest COVID-19 outbreak pinned back the Aussie.

For the Kiwi Dollar

It was another relatively quiet week on the economic data front.

While stats included building consent and business confidence figures, the focus was on the business confidence figures.

A marginal improvement in business confidence did little to support the Kiwi, however.

In July, the ANZ Business Confidence Index rose from -34.4 to -31.8.

According to the latest ANZ Report,

  • A net 9% of firms expect weaker economic activity in their own business, rising from -26% in June.
  • The retail sector drove the recovery, while the agriculture sector was the most negative.
  • 31% of firms say they intend to lay off staff, and 24% say they have less staff than a year ago.

For the Japanese Yen

It was a relatively quiet week on the economic calendar.

Retail sales continued to fall in June. Following a 12.5% slump in May, retail sales fell by 1.20%.

Industrial production delivered hope, however, rising by 2.7% in June, according to prelim figures. In May, production had tumbled by 8.9%.

A weakening U.S Dollar stemming from particularly dire economic data and a dovish FED supported the Yen.

The Japanese Yen rose by 0.29% to end the week at ¥105.83 against the Greenback. A 1.05% slide on Friday, cut the gains from earlier in the week. In the week prior, the Yen had risen by 0.82%.

Out of China

It was a quiet week on the economic data front.

July’s NBS private sector PMI figures delivered mixed results on Friday.

While the Non-Manufacturing PMI slipped from 54.4 to 54.2, the Manufacturing PMI rose from 50.9 to 51.1.

With Beijing and Washington silent, following the previous week’s diplomatic spat, the Yuan recovered to sub-CNY7 levels.

In the week ending 24th July, the Chinese Yuan rose by 0.62% to CNY6.9752 against the Dollar. In the week prior, the Yuan had fallen by 0.37%.

The CSI300 rallied by 4.20%, while the Hang Seng falling 0.45%, as a 2nd wave of the pandemic hit HK.

GBP/USD Weekly Price Forecast – British Pound Touches 200 Week EMA

The British pound has shot straight up in the air during the week, testing the 200 week EMA, and perhaps even more importantly the 1.3150 level which with my longer-term target. In fact, it hit that level much quicker than I anticipated, as I thought this was a story for a couple of weeks from now. That being said, the market is likely to continue to see upward momentum overall, but I would like to see some type of pullback in order to find a bit of value.

GBP/USD Video 03.08.20

That is probably something you will have to buy off of the daily candlestick, so at that point we could then push higher. Overall, this is a market that I think eventually will find a reason to go higher, but at this point in time we are a bit overdone. I simply cannot feel good about buying up here as its “chasing the trade”, something that I refuse to do. In fact, as soon as I stopped doing that, I started to become a profitable trader.

I think that the 1.30 level at the very least needs to be retested, but a move down to the 1.2750 level would also be very possible. Longer-term, this is a market that I think eventually gets its way towards the 1.35 handle and then could make an even bigger longer-term “buy-and-hold” type of move. However, we still have to deal with Brexit down the road, so I believe that the British pound still has very rocky moves ahead of it.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Price Forecast – British Pound Continues to Defy Gravity

The British pound has shot straight up in the air during the trading session on Friday again, in complete defiance of a lot of profit-taking when it comes to shorting US dollars around the FX world. Having said that, I think that we are probably looking at a scenario where we will eventually have a sharp correction, but that sharp correction is when those who take a longer-term outlook will be buying.

GBP/USD Video 03.08.20

I would love to see a pullback to at least the 1.30 level at this point in order to pick up the market at a better price. Murphy’s Law dictates that as soon as you buy this pair near the 1.3150 level, it will turn around and fall 500 pips. Chasing the trade is without a doubt the easiest way to lose money in the markets.

That being said, you also have to be willing to let this thing just take off and check it every day in order to find an opportunity. Right now, the risk to reward ratio is not in your favor, and if we see the market continue to go higher, then you will know that the pullback is going to be even more drastic. As the great Jesse Livermore one stated, “Sometimes we get paid to sit and wait.” That is exactly how I feel about the British pound right now, but if you are already long of this market, clearly there is no reason to get out.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD On Pace to Post 11th Straight Day of Gains

The British pound is slightly outperforming the euro and is the strongest major currency in July. GBP/USD is set to post over a 6% gain for the month.

Sterling has rallied this month even though prospects of a trade deal between Europe and the UK have declined. Earlier in the month, media outlets reported that trade talks have stalled with both parties unable to come to a compromise.

For most of the month, GBP/USD has had an unusually high correlation with the equity markets. If this correlation holds true, the pair should hold a strong tone today as positive earnings reports from several big-name tech companies have led to a sharp rally in the pre-market.

GDP data from the US released yesterday revealed a staggering 32.9% contraction in growth, attributed to the virus breakout and the subsequent lockdown measures. Analysts had called for a contraction of 34.5%, and as such, the report was not surprising and did not have a major impact on the markets.

House prices in the UK rebounded sharply in July with Nationwide reporting a seasonally adjusted increase of 1.7% following a decline of 1.6% in June. Nationwide attributed the sharp rise to pent up demand during the lockdown restrictions.

Technical Analysis

GBPUSD Monthly Chart

GBP/USD is attempting to close the month on a strong note. The pair trades at highs not seen since March 10.

A possible upside target for the pair falls at 1.3200. The level contained a spike high in March and has also acted as major resistance on a monthly chart since the second half of 2018.

While GBP/USD is nearing a major resistance level, the US dollar index (DXY) is also near a notable horizontal level.

The 92.50 price point in the dollar index served to hold it lower in 2006 and then higher between the middle of 2016 until the start of 2018.

The confluence of levels between these two assets could cause a pullback in GBP/USD next week. Or at the very least, offer a major hurdle over the near-term.

Bottom Line

  • GBP/USD is set to post over a 6% gain this month.
  • The 1.3200 level is seen as a major obstacle for the pair.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Daily Forecast – British Pound Continues Its Major Upside Move

GBP/USD Video 31.07.20.

U.S. Dollar Remains Under Serious Pressure

GBP/USD rallied above 1.3100 as the U.S. dollar continued to lose ground against a broad basket of currencies on fears about the speed of U.S. economic recovery.

The U.S. Dollar Index continued its slide and managed to get below the 93 level.

The continued spread of coronavirus in the U.S., challenging negotiations about the next coronavirus aid package and recent Trump’s tweet suggesting a possible delay in U.S. elections were the key catalysts for the downside move.

After his tweet, U.S. President Donald Trump stated that he did not want to postpone the election but was worried about problems with mail-in ballots.

However, the damage to the U.S. dollar was already done as traders started to think about potential problems with the upcoming U.S. presidential election.

Meanwhile, Republicans and Democrats continue to negotiate the new coronavirus aid package. It’s the last day of month, and the federal jobless benefit is set to expire.

Failure to maintain the program will lead to an additional blow to the U.S. economy as consumer spending will quickly decline, putting pressure on businesses and causing job losses.

Yesterday’s employment reports showed that the job market has started to succumb to pressure from the spread of coronavirus. U.S. Initial Jobless Claims increased to 1.43 million while Continuing Jobless Claims jumped to 17 million.

Technical Analysis

gbp usd july 31 2020

GBP/USD continues to rally and is trying to settle above 1.3100. The nearest resistance for GBP/USD is located at 1.3200.

RSI is at extremely overbought levels but broad weakness of the U.S. dollar continues to push GBP/USD higher. That said, the risks of a pullback increase day by day.

On the support side, the nearest support level for GBP/USD is located at 1.3070. In case GBP/USD moves below this support level, it will head towards the next support at 1.3020.

Currently, the U.S. dollar sell-off looks like a true panic so the market may easily ignore the fact that U.S. dollar is seriously oversold. At this point, GBP/USD maintains good chances to test the nearest resistance at 1.3200.

For a look at all of today’s economic events, check out our economic calendar.

The U.S Dollar Slide Continues on a Busy Day of Stats and Updates from Capitol Hill

Earlier in the Day:

It’s was another busy start to the day on the economic calendar this morning. The Japanese Yen and the Aussie Dollar were in action, with economic data from China also of influence.

Away from the economic calendar, COVID-19 and the U.S stimulus package remained in focus ahead current unemployment benefits expiring today.

The markets were also able to react to particularly dire GDP numbers from Germany and the U.S and Trump’s tweet.

Looking at the latest coronavirus numbers

According to figures at the time of writing, the number of new coronavirus cases rose by 58,655 to 4,626,692 on Thursday. On Wednesday, the number of new cases had risen by 287,638. The daily increase was lower than Wednesday’s rise and down from 270,301 new cases from the previous Thursday.

Germany, Italy, and Spain reported 3,961 new cases on Thursday, which was up from 3,179 new cases on Wednesday. On the previous Thursday, 3,593 new cases had been reported.

From the U.S, the total number of cases rose by 58,655 to 4,626,692 on Thursday. On Wednesday, the total number of cases had increased by 69,828. On Thursday, 23rd July, a total of 69,116 new cases had been reported.

For the Japanese Yen

Industrial production rose by 2.70% in June, following an 8.9% slump in May. Economists had forecast a 1.2% rise.

According to the Ministry of Economy, Trade and Industry,

Industries that mainly contributed to the increase were:

  • Motor vehicles, production machinery, and plastic products.

Industries that mainly contributed to the decrease were:

  • Inorganic and organic chemicals, pulp, paper, and paper products, and other manufacturing.

Industrial production forecasts for July were also positive. Following a 9.2% jump in production forecasted back in June, production is now forecasted to surge by 11.3% in July. In August, production is forecast to rise by 3.4%.

The Japanese Yen moved from ¥104.698 to ¥104.597 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.37% to ¥104.34 against the U.S Dollar.

Out of China

In July, the NBS Manufacturing PMI rose from 50.90 to 51.1, while the Non-Manufacturing PMI slipped from 54.4 to 54.2.

Economists had forecast PMIs of 50.7 and 54.1 respectively.

The Aussie Dollar moved from $0.72039 to $0.72052 upon release of the figures.

For the Aussie Dollar

Producer Price Index and private sector credit figures were in focus early in the day.

According to the ABS,

  • Final demand excluding exports fell by 1.2% in the 2nd quarter and by 0.4% over the past 12-months.
  • Petroleum refining and petroleum fuel manufacturing (-30.1%), child care services (-36.7%), and other agri (-6.4%) weighed.
  • There were increases in other transport equipment (+3.6%), computer and electronic equipment (+3.1%), and other motor vehicle and motor vehicle part manufacturing (+1.2%).

According to the RBA,

Total credit fell by 0.2% in June, following a 0.1% decline in May.

  • Housing credit increased by 0.2%, following a 0.2% rise in May.
  • Personal credit fell by 0.6%, following a 1.3% slide in May, with business credit falling by 0.8%. In May, business credit had fallen by 0.6%.

The Aussie Dollar moved from $0.72032 to $0.72169 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.29% to $0.72145.

Elsewhere

At the time of writing, the Kiwi Dollar was down by 0.01% to $0.6698.

The Day Ahead:

For the EUR

It’s another busy day ahead on the economic calendar. Key stats include 2nd quarter GDP numbers from France, Spain, and the Eurozone that are scheduled for release. June’s consumer spending and retail sales figures for France and Germany will also draw attention.

Prelim June inflation figures for France, Italy, and the Eurozone, also due out but will likely have a muted impact.

Away from the economic calendar, the Dollar could crumble further should lawmakers fail to pass the stimulus package. An alternative would be an agreement to extend the current enhanced federal unemployment insurance policy.

At the time of writing, the EUR was up by 0.30% to $1.1882.

For the Pound

It’s yet another particularly quiet day ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

A lack of stats will continue to leave the Pound in the hands of Brexit and the Dollar. The recent lack of economic data from the UK has allowed Dollar weakness to support a move back through to $1.31 levels.

At the time of writing, the Pound was up by 0.26% to $1.3130.

Across the Pond

It’s a busy day ahead for the U.S Dollar. June’s personal spending and inflation figures are key stats due out later today. Finalized consumer sentiment figures for July are also due out. Barring any material downward revision, however, it will likely be brushed aside.

Away from the calendar, the focus on the day will be on Capitol Hill. A failure by lawmakers to pass the stimulus package or to extend the current unemployment benefit would weigh.

We can also expect plenty of Trump tweets as COVID-19 numbers continue to rise across the U.S.

At the time of writing, the Dollar Spot Index was down by 0.31% to 92.731.

For the Loonie

It’s a relatively busy day ahead on the economic calendar. Key stats include May GDP and June RMPI figures.

Expect the GDP numbers to be the key driver on the day.

Away from the economic calendar, however, any further risk aversion would likely mask any upbeat numbers…

At the time of writing, the Loonie was up by 0.04% to C$1.3418 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Price Forecast – British Pound Continues to Flex Muscles

The British pound continues to flex its muscles as we originally sold off yet now it appears, we are willing to find buyers on dips and we have even broken above the psychologically and structurally important 1.30 level. At this point it is likely that we will go looking towards 1.3150 handle, and short-term dips will more than likely continue to be bought. With the new unemployment claims number in the United States coming out slightly bigger than anticipated, that probably is yet another reason to believe that the Federal Reserve will continue to loosen monetary policy and keep it there. If that is going to be the case it should continue to weigh upon the value of the US dollar overall.

GBP/USD Video 31.07.20

The British pound on the other hand seems to defy gravity and has gotten rather parabolic. I do not like buying it at this juncture, although you clearly cannot sell it. We desperately need some type of pullback in order to keep up the momentum, but right now it looks like that is going to be very unlikely. This thing simply will not break down and is apparently unaware that Brexit is still something that people will be dealing with. Nonetheless, price is the truth, and that is really all you need to know, it looks like the British pound continues to go higher and dips continue to offer value. I believe that there is a massive support zone that starts at the 1.2750 level and extends down to the 1.2650 level. If we were to break down below that level it would change a lot of things but right now that seems to be very unlikely.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Attacks 1.3000 Level Despite a Dollar Recovery

The dollar initially moved lower after yesterday’s Fed decision and press conference but has since recovered some of its losses. Despite the dollar strength seen in early day trading today, GBP/USD continues to show strength.

Fed Chair Powell was not as optimistic as the recent movements in the dollar and equity markets suggest. He pointed out that recent data might be signaling that the economic recovery is stalling and reiterated that policymakers and the governments need to continue providing support to the economy.

Powell emphasized containing the virus is crucial for the economy to recovery but acknowledged the sharp earlier rebound in the labor markets.

The dollar is down about 4% in July thus far on a trade-weighted basis as investors have shown a strong appetite for risk. Meanwhile, gold prices are up around 10% this month on the expectation that interest rates will remain low for some time.

The US will release GDP figures later today which is expected to show a nearly 35% contraction in growth during the first quarter. The data is likely to cause a volatile reaction in the markets, especially if the figure deviates from analyst expectations.

The UK announced an increase to the quarantine period for citizens showing signs of having contracted the Coronavirus. The self-isolation period has been increased from 7 to 10 days as new evidence shows that the risk of infecting others 7-9 days after being infected is higher than previously determined.

Technical Analysis

GBPUSD Daily Chart

While the dollar is bouncing broadly against most of its counterparts, Sterling is the only currency to hold near recent highs versus the greenback.

With the 1.3000 handle in play, the pair could pull back from current levels if the dollar is able to extend on its recovery.

Near-term support for the pair is seen at 1.2959 and considering the recent upward momentum, buyers are likely to defend this level. It may take some form of a catalyst for a change in trend, and so far, yesterday’s Fed meeting has not had a big impact on the exchange rate.

A potential medium-term target for GBP/USD is seen at 1.3200 as the level held the pair lower on several attempts early in the year.

Bottom Line

  • GBP/USD is outperforming its major counterparts and is the only currency that hasn’t declined against the greenback in early trading on Thursday.
  • GDP figures from the US will be released later today. A volatile reaction in the markets appears likely.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Daily Forecast – British Pound Pulls Back After Major Upside Move

GBP/USD Video 30.07.20.

U.S. GDP Growth Rate In Focus

GBP/USD faced resistance at 1.3020 and declined below 1.3000 as the U.S. dollar started to rebound against a broad basket of currencies.

The U.S. Dollar Index fell as low as 93.18 immediately after yesterday’s Fed Interest Rate Decision but then managed to get more support and is currently trying to settle above 93.5.

The Fed acknowledged that the speed of economic recovery depended on the progress on the coronavirus front and also stated that the recent surge in the number of new cases was hurting economic prospects.

The Fed also promised to support the economy as long as necessary but did not announce any new measures. Most likely, any new decisions will be made in the fall.

Today, the U.S. will release the second quarter GDP Growth Rate report. Analysts expect that GDP has contracted by 34.1% quarter-over-quarter as coronavirus-related restrictions dealt a heavy blow to the economy.

Meanwhile, the Initial Jobless Claims report is projected to show that 1.45 million Americans filed for unemployment benefits in a week, compared to 1.42 million in the previous week. Continuing Jobless Claims are expected to stay flat at 16.2 million.

Any negative surprise on the employment front could put pressure on riskier assets. At the same time, it remains to be seen whether the U.S. dollar will be able to benefit from safe haven buying as demand for safe haven assets has shifted to precious metals.

Technical Analysis

gbp usd july 30 2020

GBP/USD is pulling back after the major upside move. The nearest support for GBP/USD is located at 1.2900.

In case GBP/USD declines below this support level, it will head towards the next support level which is located at the high of the previous upside move at 1.2815.

On the upside, GBP/USD faced resistance at 1.3020. If GBP/USD manages to settle above this level, it will head to the next resistance level at 1.3070.

The current pullback is not suprising since RSI was in the overbought territory. At this point, the upside trend in GBP/USD remains intact, and the U.S. dollar will likely need strong positive catalysts to break the current trend.

For a look at all of today’s economic events, check out our economic calendar.

Economic Data Puts the Greenback and the EUR in Focus

Earlier in the Day:

It’s was a busier start to the day on the economic calendar. The Kiwi Dollar and the Japanese Yen were in action in the early part of the day.

Away from the economic calendar, COVID-19 and the U.S stimulus package remained in focus following the FED’s overnight monetary policy decision.

Looking at the latest coronavirus numbers

According to figures at the time of writing, the number of new coronavirus cases rose by 287,638 to 17,171,292 on Wednesday. On Tuesday, the number of new cases had risen by 241,391. The daily increase was higher than Tuesday’s rise while down from 288,688 new cases from the previous Wednesday.

Germany, Italy, and Spain reported 3,179 new cases on Wednesday, which was up from 2,602 new cases on Tuesday. On the previous Wednesday, 2,217 new cases had been reported.

From the U.S, the total number of cases rose by 69,828 to 4,498,209 on Wednesday. On Tuesday, the total number of cases had increased by 64,799. On Wednesday, 22nd July, a total of 72,306 new cases had been reported.

For the Kiwi Dollar

Building consents and July business confidence figures provided the Kiwi Dollar with direction early on.

According to NZ Stats, building consents rose by 0.50% in June, following a 41.7% jump in May. While up marginally for the month, consents were up by close to 20% from June 2019.

The Kiwi Dollar moved from $0.66681 to $0.66657 upon release of the data.

In July, the ANZ Business Confidence Index rose from -34.4 to -31.8.

According to the latest ANZ Report,

  • A net 9% of firms expect weaker economic activity in their own business, rising from -26% in June.
  • The retail sector drove the recovery, while the agriculture sector was the most negative.
  • 31% of firms say they intend to lay off staff, and 24% say they have less staff than a year ago.

The Kiwi Dollar moved from $0.66649 to $0.66570 upon release of the figures. At the time of writing, the Kiwi Dollar down by 0.18% to $0.6657.

For the Japanese Yen

According to the Ministry of Economy, Trade, and Industry, retail sales fell by 1.20%. Economists had forecast a 6.50% slide. In May retail sales had tumbled by 12.3% in May, year-on-year.

The Japanese Yen moved from ¥105.012 to ¥105.008 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.14% to ¥105.07 against the U.S Dollar.

Elsewhere

At the time of writing, the Aussie Dollar was up by 0.18% to $0.7175.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar. Key stats include 2nd quarter GDP and July unemployment figures from Germany.

The Eurozone’s unemployment rate and German prelim July inflation figures for July are also due out. The numbers will likely have a muted impact on the EUR.

Expect the GDP and July unemployment figures to be the key driver, along with COVID-19 news and U.S stimulus package updates.

At the time of writing, the EUR was down 0.17% to $1.1772.

For the Pound

It’s yet another particularly quiet day ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

A lack of stats will continue to leave the Pound in the hands of Brexit and market risk sentiment.

At the time of writing, the Pound was down by 0.13% to $1.2980.

Across the Pond

It’s another relatively busy day ahead for the U.S Dollar. 2nd quarter GDP and weekly initial jobless claims figures are due out.

While we can expect influence from the GDP numbers, the weekly jobless claims could garner more attention. Another rise in claims will test the market’s resolve.

Away from the calendar, the U.S stimulus package and COVID-19 will remain in focus.

At the time of writing, the Dollar Spot Index was down by 0.10% to 93.357.

For the Loonie

It’s another particularly quiet day ahead on the economic calendar. There are no material stats due out of Canada to provide the Loonie with direction.

A lack of stats will leave the Loonie in the hands of market risk sentiment that will be driven by geopolitics and COVID-19.

At the time of writing, the Loonie was down by 0.05% to C$1.3346 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Price Forecast – British Pound Reaching Major Figure

Sometimes, the fate of a trader is to simply sit and watch. That has been the case with me and the British pound because I have not had the pullback that I have wanted in order to get involved. I suggested that the 1.30 level would be targeted, and it certainly looks all but assured at this point. As I record this, we are only 20 pips away so it is hard to believe that we will get there. The British pound has been benefiting from being historically cheap, while the Federal Reserve works against the value of the US dollar in general. Given enough time, I think that we go towards the 1.3150 level.

GBP/USD Video 30.07.20

Perhaps the 1.30 level will cause enough profit-taking in order to get that pullback I want, and that is essentially what I am waiting on. With the FOMC statement coming out later in the day it is likely that we could get some volatility, but I would not be a seller of the pound anytime soon, unless of course the Federal Reserve suddenly changes its stance on almost everything. Because I do not think that is going to happen anytime soon, it is a fair shot that we will be looking at buying any dip as it should offer value.

Longer-term, we could be seeing a major trend change against the US dollar gets multiple currencies, so when these pairs such as the British pound and the Euro pulled back, they should offer value in general. There is no need to fight the momentum.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Tests 50-Month Moving Average Ahead of Fed Decision

GBP/USD posted an eighth straight day of gains on Tuesday and is seen trading at resistance ahead of today’s Fed decision.

Investors have shrugged off concerns over the lack of progress in a trade deal between the UK and Europe. The pair has also diverged from its correlation with equities to extend higher while equities have moved sideways.

The Federal Reserve is not expected to act today, however, their view on the rise of Coronavirus cases will be important. The daily increase in virus cases reached a high above 75 thousand just over a week ago. By comparison, daily cases were around 17-20 thousand at the last Fed meeting.

A proposed fiscal stimulus package in the US takes the pressure off the Fed somewhat. Earlier in the week, the US announced plans of a stimulus package that is expected to be worth $1 trillion. The package includes another round of $1200 checks for US citizens although it entails a sharp cut to
emergency weekly unemployment benefits.

The UK housing market appears to be rebounding according to the latest report from the Bank of England. Data showed an increase of 40 thousand new mortgages approved for home purchases in June, ahead of the analyst estimate of 35 thousand.

Technical Analysis

GBPUSD Weekly Chart

A sharp decline in the dollar has been a major driver for all of the currency pairs as the trade-weighted dollar index touched fresh two-year lows earlier today.

GBP/USD has benefited from the weakness and is seen trading at its best level since March.

A confluence of resistance has come into play. On a daily chart, the 1.2959 price point was important in the last quarter of 2019. It held the exchange rate lower on several attempts during that time, leading to a lengthy consolidation.

Further, the 50-month moving average has come into play. While the overhead resistance is something to be mindful of, the pair has shown extremely strong upward momentum as of late, and near-term dips may still be quickly bought up.

Bottom Line

  • GBP/USD is nearing the 1.3000 handle ahead of today’s Fed meeting.
  • Major resistance is in play, although the pair has not shown signs of slowing momentum as of yet.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Bulls are Relentless

The GBP/USD is in a strong uptrend. If the H1 or H4 closes above 1.2961, the doors to 1.3000 will be open.

The POC zone 1.2845-60 should provide bounce for new buyers. If we see a retracement, the POC zone is where buyers are. However, as the trend is strong, we might see a bounce at 14.6 fib. The first target is 1.2961, followed by 1.2992 and 1.3045. If the market gets to DH4 and above, we should see some retracement due to profit taking.

The Analysis has been done with the CAMMACD.Core and Sit Systems

For a look at all of today’s economic events, check out our economic calendar.

 

GBP/USD Daily Forecast – U.S. Dollar Under Pressure Ahead Of Fed Rate Decision

GBP/USD Video 29.07.20.

British Pound Enjoys Strong Support

GBP/USD continues its upside move as markets await Fed Interest Rate Decision and commentary from Jerome Powell.

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, has settled near support at 93.5.

This is an important level for the American currency since a move below the support at 93.5 will likely lead to increased downside momentum. This scenario is bullish for GBP/USD.

While the Fed is expected to leave the interest rate unchanged, traders will focus on Powell’s commentary.

Yesterday, CB Consumer Confidence report showed a decline from 98.3 in June to 92.6 in July. The rising number of coronavirus cases and uncertainty regarding future unemployment benefits have put pressure on the consumer who is a key driver of the U.S. economy.

Meanwhile, Republicans and Democrats continue negotiations on the new coronavirus aid package. Republicans have proposed a $1 trillion package but Democrats believe that it is too small. Making negotiations more complex, some Republicans oppose the bill because it is too expensive.

These developments put additional pressure on the Fed which should reassure the markets that it has enough firepower to help the economy if recovery stalls.

This is a very important moment for the U.S. dollar since an extremely dovish commentary from the Fed may cause an additional sell-off. If the Fed stays cautious and does not commit to additional stimulus, the U.S. dollar will likely rebound.

Technical Analysis

gbp usd july 29 2020

GBP/USD has managed to settle above the resistance level at 1.2900 and continues to move higher.

The next resistance for GBP/USD is located at 1.2980. In case GBP/USD moves above this resistance level, it will continue the current upside trend and head towards the next resistance level at 1.3070.

On the support side, the previous resistance at 1.2900 will likely serve as the first support level for GBP/USD.

A move below this support level will open the way to the test of the next support level at 1.2815.

I’d note that GBP/USD continues to move higher in a tight upside channel while RSI has reached the overbought territory, increasing chances for a pullback.

For a look at all of today’s economic events, check out our economic calendar.

The Stimulus Package, COVID-19, and the FED Keep the Dollar in Focus

Earlier in the Day:

It’s was a relatively quiet start to the day on the economic calendar. The Aussie Dollar was in action in the early part of the day.

Away from the economic calendar, COVID-19 and the U.S stimulus package remained in focus ahead of the FED.

Looking at the latest coronavirus numbers

According to figures at the time of writing, the number of new coronavirus cases rose by 241,391 to 16,883,654 on Tuesday. On Monday, the number of new cases had risen by 229,469. The daily increase was higher than Monday’s rise and up from 240,565 new cases from the previous Tuesday.

Germany, Italy, and Spain reported 2,602 new cases on Tuesday, which was down from 7,167 new cases on Monday. On the previous Tuesday, 1,889 new cases had been reported.

From the U.S, the total number of cases rose by 64,799 to 4,498,209 on Tuesday. On Monday, the total number of cases had increased by 61,571. On Monday, 21st July, a total of 67,140 new cases had been reported.

For the Aussie Dollar

2nd quarter inflation figures were in focus in the early part of the day.

The annual rate of inflation came in at -0.3%, which was marginally better than a forecasted -0.4%. In the 1st quarter, the annual rate of inflation had stood at 2.20%. In the 1st quarter, the annual rate of inflation had accelerated from 1.8% to 2.20%. Quarter-on-quarter, consumer prices fell by 1.90%, following a 0.3% rise in the 1st quarter. Economists had forecast a 2.00% slide.

According to the ABS,

  • The June quarter slide was attributed to free child care (-95%), sliding automotive fuel prices (-19.3%), and a fall in pre-school and primary education prices (-16.2%). Excluding these, consumer prices would have risen by 0.1%.
  • Cleansing and maintenance price rose by 6.2%, with non-durable household products up by 4.5%.
  • There were also increases in prices for furniture (+3.8%), major household appliances (+3.0%), and audio, visual, and computing equipment (+1.8%).
  • In the June quarter, the quarter-on-quarter decline was the largest in the 72-year history of the CPI.
  • It was only the 3rd time since 1949 that the annual rate of inflation had turned negative.

The Aussie Dollar moved from $0.71645 to $0.71575 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.04% to $0.71575.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.03% to ¥105.14 against the U.S Dollar, with the Kiwi Dollar down by 0.11% to $0.6654.

The Day Ahead:

For the EUR

It’s another particularly quiet day ahead on the economic calendar. There are no material stats from the Eurozone to provide the EUR with direction.

The lack of stats will leave the EUR in the hands of COVID-19 updates and geopolitics. Late in the day, the FED is also in action later in the day.

From the U.S, the continued spike in new COVID-19 cases has weighed heavily on the Dollar. Any 2nd wave hitting EU member states beyond Spain would be a test the EUR.

At the time of writing, the EUR was up by 0.03% to $1.1720.

For the Pound

It’s yet another particularly quiet day ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

A lack of stats will continue to leave the Pound in the hands of Brexit and market risk sentiment.

At the time of writing, the Pound was down by 0.11% to $1.2918.

Across the Pond

It’s another relatively busy day ahead for the U.S Dollar. June pending home sales and goods trade figures are due out later today.

The stats will likely have a muted impact on the Dollar and risk sentiment, however. For the Dollar and the broader market, the FOMC monetary policy decision and press conference is the main event.

Away from the calendar, the U.S stimulus package, tensions between the U.S and China, and COVID-19 will remain in focus.

At the time of writing, the Dollar Spot Index was up by 0.10% to 93.788.

For the Loonie

It’s another particularly quiet day ahead on the economic calendar. There are no material stats due out of Canada to provide the Loonie with direction.

A lack of stats will leave the Loonie in the hands of the weekly EIA crude oil inventory numbers and market risk sentiment.

The key to the U.S economy and its trading partners is the passing of the latest COVID-19 stimulus package. Any further delays would further limit the upside in the Loonie.

At the time of writing, the Loonie was down by 0.01% to C$1.3381 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.