The U.S. Dollar is trading in mostly tight ranges following a good day for equity markets despite a rebound in COVID-19 cases in the U.S. and other global spots.
Overview
Some cities around the world such as Sydney, Australia are shutting down again as they fear the return to infections in places that also has success managing the contagion such as Japan. Economists feel that the high number of cases in Texas, Florida and the most populous state in California mean the recovery domestically is stalling and new shutdowns could mean a return to worsening, not improving data. The buck is neither gaining nor losing at the moment.
Data is light today, but government reports on oil production later today could have an impact on MXN and CAD this week as the American Petroleum Institute Report is released this afternoon. We shall see if there are any items that add to the impact on the buck, but all eyes are on understanding the impact of re-shutting down in what are typically busy areas of summer economic activity. Later this week we will watch for any Brexit negotiation surprises, which we feel could combine to sink the buck further if they take a turn towards solution, not delays.
What to Watch Today…
- No major events scheduled for today
Complete Economic Calendar can be found here.
EUR
The Euro is holding on to most gains from last week although data is starting to look somber once more for the Ancient continent. EU Commission officials and analysts announced a further downward revision to their economic output outlook for the year of (-8.7%), a deeper contraction to the zone’s Gross Domestic Product. This comes after German Industrial Production that disappointed, failing to reach double-digit growth as forecast coming in just at 7.8% for the month of May. We foresee some EUR turbulence, but only if somehow news offer something to buck appreciation. At the moment, the coronavirus pandemic is stalling Europe less than the U.S.
GBP
Pound prospects for growth have been looking better as of late with news of a change of tone in Brexit talks and changes to the economic aid approach from the U.K. government. Chancellor of the Exchequer Rishi Sinak is proposing further relief in taxes for entertainment items, even lowering taxes one pays at the pub. The idea is to get the wheels more greased up with demand falling as the pandemic inflicts primarily fear of consumption. We may see major swings for Sterling next two months, which will shape the course of Brexit and decide if negotiations for a new trade deal can be achieved in a reasonable amount of time or delays and animosity take hold. We shall see, but again, now over four years of this back-and-forth.
