The reality of the current coronavirus conditions vs the vaccine hopes has caused markets to take stock. The US$ edges up from its 29-month lows vs a basket of major currencies, oil and equities are also down on the day. Global coronavirus cases surpass 56mio, while US confirm cases hit 11.5mio and US deaths pass 250k. Market commentators are getting louder highlighting the need for targeted US Stimulus to tackle the pandemic’s impact on the economy. US election wrangling’s continue as Biden presses the President to start the transition process. In the background Georgia hand recount concludes while efforts to stop vote certification falters in Pennsylvania. Asian currencies and CNY are all down 0.25% on average vs US$. Trading currencies are weaker with JPY down 0.15%, ZAR & NOK are down 0.3%, while AUD & NZD drop 0.45% vs US$. Today focus returns to US Jobless data, US Existing home sales and Phili Fed Manufacturing Survey which are likely to provide some intraday direction to the markets
Oil prices drops 1% as rising coronavirus cases outweighs vaccine optimism causing short-term demand concerns to return. The EIA saw US crude inventories rise at just 50% of expectations while diesel and heating oil inventories drop. C$ retreated from its 7-day high 1.3041 vs US$ as equity & oil markets drop. Wednesday Canada CPI rose to 1.8% edging a little closer to the BoC 2% target. Bias remains to sell US$/C$ on rallies towards 1.32. Support holds at 1.3025 and resistance at 1.3170.
Euro continues to hold below the key 1.1880 amid stimulus promises and increasing covid-lockdowns. EBC’s President reiterated her commitment of monetary stimulus and wants more stimulus support form EU leaders. Stimulus will be likely be a hot topic at the EU summit as possible vetoes from Hungry & Poland to the EU recovery fund, which could reignite the EU stimulus dispute. Brexit, surging coronavirus cases and stimulus is likely to be the main talking points at today’s EU summit. Bias remains to sell Euro on any rallies over 1.19. Support holding at 1.1780 with resistance at 1.1880, if breached look for a test 1.2011(sep1st)
GBP holds above 1.32 vs US$ as Brexit remains the primary driver for the pound. Brexit jitters retuned after the EU’s chief negotiator cancelled his Tuesday and Wednesday briefing. Pundits are taking the cancelled briefings as a sign that the issues are being worked through to secure the Brexit deal. In other trade news Canada and the UK are expected to sign their post Brexit free-trade deal in coming days. EU Summit comments – US data releases – Brexit updates will all be focused on for direction. Support 1.3150 with resistance extends to 1.3325, if breached look for possible extension to 1.3482 (Sep1st).