Thursday August 20th, 2020

The US$ index rallies 1%, equity and oil markets weaken after dovish FOMC minutes. The FOMC minutes reiterated its message for an expected tough and prolonged economic recovery, but the minutes were less dovish than some had expected. The US, Chinese, Philippines, Sri Lankan, Turkish and Norwegian central banks all keep rates on hold with the ECB expected to follow suit. China and US have agreed to reschedule the trade talks “in the coming days” to evaluate the first six-months of the phase 1 trade deal. A “risk-off” mood returned to the markets causing equity and oil markets to ease and currency markets weaken from recent multi-month highs. In US Politics Joe Biden will accept the Dems Presidential nomination and will spell out his vision for the Presidency today. Intraday the focus shifts to the ECB Monetary Policy meeting alongside Phili Fed manufacturing survey and initial jobless claims.

Oil prices slipped from ongoing demand concerns which increased after the FOMC minutes painted a concerning picture of the US economic recovery. C$ weakened quickly from its 7-month highs after the annual CPI rate fell, oil prices eased, alongside a surging US$. Focus will be on the US data releases, while in Canada we have the ADP employment change and BoC Beaudry will be speaking.  Support lifts to 1.3188 with resistance at 1.3265.

Euro retreated quickly from its multi-year high after the FOMC minutes and a rebound in US$ safe haven buying. Intraday it will be another busy day for data and central bank comments, investors will focus on the ECB Monetary Policy Meeting Accounts closely for their economic assessment on the EU’s pandemic recovery. Support lowers to 1.1815 with resistance at 1.1915.

GBP rebounds from Wednesdays +1% selloff vs US$ to rally above the 1.31 level in early trading. The 7thround of Brexit talks which began on Tuesday show little signs of progress, with the latest disagreement over UK truckers’ access to Europe likely to breakdown negotiations. Intraday Brexit updates and US data will provide intraday direction. Support dips to 1.3080 with resistance at 1.3190.