Monday July 20th, 2020

Stimulus & Vaccine hopes are balancing out investor concerns over rising coronavirus cases. The EU appears closer to a compromised recovery fund and the US is expected to introduce a new stimulus package this week. The Lancet medical journal is anticipated to publish positive results from AstraZeneca medical trails. Offsetting the positive news, Coronavirus cases continue to rise in California, Florida and Texas with IC units reporting they are nearing maximum capacity and the prospect of new lockdown measures are growing. The US$ index is opening slightly down on the day, Asian & Commodity currencies are flat, while Eur, GBP, NOK, DKK etc all strengthened. No key economic data today so the focus remains on the EU Summit, Vaccine and Covid-19 updates.

Oil opens slightly weaker with rising covid-19 cases remaining the primary cause of concern. C$ remains the outlier of its commodity peers remaining under pressure as Aud, Nzd & Nok have all strengthen. Coronavirus cases continuing to surge in the US and the prospect of further lockdowns remain, expect C$ to remain vulnerable to further weakness. Support 1.3535, with resistance 1.3690 (Jun30th).

Euro strengthens as Euro leaders continue to strive for a compromise at the EU Summit. The talks continue for a fourth straight day where it appears they are closer to agreeing on a recovery fund, with a possible compromise which could include Eur 390bln in grants. Eur has strengthened on anticipation of an agreement, if the EU Summit concludes without a agreement, then expect Euro to weaken back to 1.1200. No economic data out of the US today, so the EU summit will dictate intraday direction. Support at 1.1350 with resistance sits 1.1492 (2020 highs) if breached 1.1620 (Oct 2018)

GBP bounces from a 3-week low despite worsening Sino/UK relationships and low Brexit hopes. The UK is set to cancel its extradition treaty with HK, this alongside the cancelling of Huawei 5G contracts and potential sanctions action has increased tensions with China. Brexit talks are set to resume today, despite concessions from the EU the UK feel the concessions are insufficient. Both sides continue to dig in and the prospect of further compromises appear to be low. Vaccine hopes and EU stimulus is helping support GBP. Support 1.2460 with resistance to 1.2670 (A triple top).