Monday August 3rd, 2020

US$ is attempting to rebound after it suffered its worst performing month in a decade in July. Driving the US$ strength is investor uncertainty over the lack of progress for the US fiscal stimulus and the end of the Covid-unemployment benefits. Coronavirus surpassed another milestone with +18mio virus cases globally, almost 700k related deaths and Australia joining the UK in announcing new major lockdown restrictions. Sino/US tensions increased as TikTok joins the ongoing list of disputes including Huawei, HK & Xinjian human rights issues widening the wedge in relationships between the two largest global economies. Markets will focus on US Stimulus updates and the ISM Manufacturing data, specifically PMI for intraday direction.

Oil prices slip as OPEC is set to raise output in August, adding 1.5mio bpd as part of its members agreement amid rising covid-19 cases expected to cap demand. The C$ ended July up 1.5%, after having 4-weeks of straight gains vs US$ which was its best winning streak in 6-years. C$ starts August a touch weaker, but with the Canadian civic holiday today the US$ will drive direction. Support holds at 1.3365 with resistance at 1.3480.

Euro extends Friday’s selloff as it edges back towards 1.1700 levels as investor concerns mount over the lack of progress over the US stimulus package. The Eurozone posted better than expected PMI data for July, helping the Euro bounce off its intraday lows. New coronavirus outbreaks in Spain raised concerns, but the flareups appear to have been quickly contained. Bias remains to buy Euro on dips for med-term rally towards 1.22. Minor vs US$. Minor support at 1.1700 and resistance at 1.1805 with the next key resistance at 1.1996 (May2018).

The anchors weighing on the GBP have finally stalled the pounds rally, seeing the pound dip back to 1.3 vs US$. A rebound in covid cases which has prompted fresh lockdown restrictions in pockets of the UK. UK Markit Manufacturing PMI slipped below expectations and worse than the previous month, causing concerns over the UK’s economic growth. Ongoing UK/Sino tensions and Brexit remaining deadlocked all continue to be anchors against GBP med-term strength. Minor support at 1.3010 if breached expect 1.2925 with resistance at 1.3155.