29/07 – Dollar stable ahead of Fed meeting

GBP: Little to contribute in a push towards 1.30
EUR: Stalling slightly
USD: Fed meeting tonight

Sterling

Sterling continues to bubble higher against the USD whilst enjoying limited strength anywhere else. GBPUSD is moving towards the 1.30 level but we have very little belief that gains towards or above that level will prove to be long-lasting or resilient. Away from Brexit news, with trade talks ongoing, and Parliament now on recess the data calendar is quieter than an Easyjet flight to Spain today.

Mortgage approval figures due at 09.30 may be enough to show that the housing market is getting up off the matt.

Euro

The single currency remains strong this morning although is still looking for a catalyst for its next move higher. That could come from tomorrow’s run of European inflation and consumer confidence numbers but there seems to be limited opportunity for gains today.

One thing to have in the back of one’s mind are the recent increases in Covid-19 cases in some parts of Europe. Over the past seven days, Germany registered 3,611 new cases with Spain, France and Belgium all showing moves higher too.
Any sign that an increase in cases has turned into an outbreak that is out of control and market psychology will once again shift to fear, limiting the single currency’s ability to push higher.

US Dollar

Tonight’s Federal Reserve meeting comes at an interesting time given the squabbling in Congress over stimulus. Yesterday saw the central bank extend its lending programs to businesses through until the end of the year and markets remain convinced that further stimulus will be made available in the near future given the US’s wobbling recovery.

That near future may not be today however and expectations of a change in policy today are likely to be disappointed and we think this will another meeting where the FOMC sits on their hands and waits to see how the economic data develops in the coming months.

This should keep the USD downtrend in place for now and we do not expect much of a movement in prices in the coming 24hrs.

Elsewhere

The AUD has once again moved higher overnight with local inflation data supporting the currency and the belief that the domestic economy may be recovering faster than previously thought. Inflation measures fell into negative territory for only the third time since records began but the falls were mainly caused by temporary factors through the pandemic such as free childcare vouchers.

AUDUSD is currently trading at its highest level since April 2019 with investors looking for a move above the 0.7225 level soon.

Have a great day.

Share:
Jeremy Thomson-Cook

Jeremy Thomson-Cook

Jeremy has over 13 years experience working in the FX industry. As a specialist in political risk mitigation and currency hedging, he regularly advises clients on the day-to-day moves of the markets and the implications of fiscal and monetary policy on international businesses.