Tuesday July 28th, 2020

The US$ index rebounded from a two-year low as markets consolidated ahead of the FOMC two-day meeting. The FOMC meeting gets underway today, where the central bank is widely expected to leave monetary policy unchanged when it makes its announcement on Wednesday. Ahead of the FOMC, Asian & European currencies weakened around ¼% vs US$, while NZD, ZAR & RUB fell over ½% vs US$. Oil prices remain flat, Equity markets are mixed and Gold & Silver markets remain positive. Alongside the FOMC, COVID updates and the Republicans US$ 1 trillion stimulus package will all be monitored closely. Key data to releases today, US Consumer Confidence & S&P Case-Shiller Home Price Indices.

Oil prices remain steady as additional US Stimulus hopes offset ongoing demand concerns caused by rising covid-19 cases globally. C$ rallied significantly overnight testing 1.3327, but the rally was short lived as US$ rebounded ahead of the FOMC meeting. Further US$ consolidation may see a re-test of 1.3450 intraday. Support holds at 1.3310 (June 10th) with resistance at 1.3485.

Euro retreats from its 2-year high ahead of the FOMC meeting with the US$ rebounding against most currencies. Longer-term signals remain positive for Euro supported by improving economic data, stimulus support and increasing productivity as lockdown restrictions continue to be loosened. The spike in coronavirus cases in Spain has put the continent on alert as they work aggressively to contain the outbreak. Bias remains that Euro will continue to rally and is a “buy on dips” strategy. Support at 1.1650 with key resistance at 1.1850 (Jun2018).

GBP continues to surge despite the US$ index rebounding and GBP looks set to re-test fresh highs. Positive CBI trade survey data and fresh optimism over a potential UK/US trade deal appears to be offsetting ongoing Brexit concerns. Analysts have turned bearish on GBP, believing it’s come along way with little significant data to support the rally. The average forecast is for rebound towards the Support level of 1.2780 with resistance holding 1.2976 (Mar2020) if breached then 1.3200 (9 Mar2020).