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Sentiment Hangs On Both Monetary & Fiscal Aid

Jul 29 2020, 07:31 PM (+06) | Orbex.com

Uncertainty Looms on Jobless Claims Package

The US Index halted its free-fall at the close on Tuesday. However, with the US far from reaching an agreement on its fiscal stimulus package, further weakness can be expected. 

In addition, COVID-19 cases continue to rise in several US states, dampening sentiment further.

Meanwhile, investors await the outcome of the FOMC meeting later today. Fed Chair Powell is expected to reiterate that interest rates will remain near zero.

Adding to that, more monetary support is unlikely to be delivered imminently. Will participants read that as a dovish signal?

Europe Prepares as COVID Comes Back to Bite

The euro continued to trade over 1.17 against the greenback. However, it posted its first daily loss in more than a week. This came as the Fed decided to extend its lending facilities by three months.

In addition, Europe was hit with fears of a second wave as Spain witnessed a spike in infections.

This led the UK to impose a quarantine on all travelers returning from Spain. Other European counties are expected to follow suit. 

Pound Set for a Testing Period Over Brexit Talks

The pound kept its momentum against the US dollar. It closed 0.88% higher on Tuesday. As a result, Cable reached a 4-month high above the 1.29 handle.

With trade talks over food import standards taking a bitter turn, however, the pound was at risk. In addition, the EU reiterated the need for a deal to be reached by October.

Asia Maintains Dominance Amidst a Weaker Dollar

The yen closed towards 105.00 over the dollar on Tuesday. Pandemic concerns pushed traders towards the safe-haven, sending the pair to a 5-month low.

The Australian dollar looked at pushing towards $0.72. This high has not been seen since April last year. This came as Consumer Confidence in the US improved MoM.

Also, the quarterly CPI figures in Australia turned deflationary. However, this didn’t seem to affect the pair.

Indices Shaky on Geo-Political Headlines

US indices closed lower last night, pressured by a lack of clarity over the US fiscal package. The delay in negotiations suggested that the economic recovery is stalling. This weighed on market sentiment.

Gold Heading for Another Surge?

Gold fell $70 in yesterday’s trading session after a short sell-off. However, it managed to end the session 0.87% higher. This indicates momentum is still bullish as headlines regarding the coronavirus keep disappointing.

WTI Trades Await EIA to Validate Surprise API Drop

Oil prices remained over $41 at the close of Tuesday’s session.

Prices are trading slightly higher in today’s session as the API reported a drop of 6.8 million bpd. Investors await the EIA report later today to validate increasing demand.

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