United States of America
The US currency today is weakening against the pound and the euro but is moderately strengthening against the yen.
Today, investors are focused on the publication of data on initial jobless claims and negotiations on a new stimulus package for the US economy. The number of initial jobless claims was 963K, falling below 1 million for the first time since March 21, despite the second wave of the coronavirus epidemic. These data give investors hope for the continued recovery of the labor market. However, they remain preoccupied with the stalemate in congressional talks on an economic support package. Yesterday, the leader of the Democrats Nancy Pelosi said that the parties seriously disagreed in their positions, and Finance Minister Steven Mnuchin accused the Democrats of not being ready to compromise. These comments give the market little hope of reaching an agreement in the near future. Investors are also alarmed by the further aggravation of relations between the United States and China. Today, US Secretary of State Mike Pompeo hinted at further actions by the administration against the Chinese apps, saying Donald Trump’s decrees could be directed not only against TikTok and WeChat.
Today, the euro is strengthening to the US dollar and the yen but is moderately weakening to the pound.
Released today, data on the consumer price index in Germany for July confirmed the negative market forecasts. MoM, the indicator was −0.5%, and YoY, at −0.1%. However, investors remain optimistic as US President Donald Trump has decided not to temporarily raise overall import tariffs for EU goods. The United States has this right after the WTO decision, which found the European Union guilty of illegally subsidizing Airbus. The tariffs were increased only for certain European products, for example, for French jams. Experts believe Trump is not raising overall tariffs for political reasons. Such an action could put pressure on the purchasing power of the population and negatively affect the mood of citizens before the presidential elections.
The British pound today is generally strengthening to the main competitors– the US dollar, the yen, and the euro.
In the absence of important macroeconomic releases, the movement of the pound is of technical nature. It is only worth noting that the UK continues to try to conclude trade deals with various states, which will have to enter into force after the UK finally leaves the EU. To date, the government has managed to negotiate 20 deals with 50 countries, but membership in the European Union gave it the right to trade duty-free with 70 countries. Yesterday, the representatives of New Zealand said that they are disappointed with the course of trade negotiations with the UK and may not have time to agree on a deal before the end of the year.
The Japanese yen is weakening today against its main competitors – the euro, the pound, and the US dollar.
In the absence of important macroeconomic releases, JPY movement is of technical nature. However, the July corporate goods price index was above the market expectations. MoM, the indicator remained at 0.6% instead of falling to 0.3%, and YoY, it increased from −1.6% to −0.9%. We should also note that the Japan Center for Economic Research predicted a fall in national GDP in Q2 by 26.59% amid the coronavirus pandemic.
Today, the Australian currency is strengthening against the yen, weakening against the euro and the pound, and has an ambiguous dynamics against the US dollar.
Investors are focused on July data from the labor market, which turned out to be mixed. The employment in Australia increased by 114.7K instead of 40.0K expected. However, the unemployment rate also rose from 7.4% to 7.5%, the highest level in 22 years. In the future, it may increase even more due to the negative impact of the coronavirus outbreak in Victoria.
Oil prices are calm today and are moving in narrow lateral ranges.
Quotes are influenced by ambiguous factors. The EIA report published yesterday recorded a decrease in oil reserves in the United States by another 4.512 million barrels. At the same time, the volume of distillates fell by 2.322 million, and gasoline – by 0.722 million barrels. However, the International Energy Agency (IEA) lowered its forecasts for global oil demand for the first time in several months amid the intensification of the coronavirus pandemic. The agency said that this year the demand will be 91.1 million barrels per day, which is 8.1 million less than last year.