USD Under Pressure
The DXY grinded lower last week as the greenback continued to come under pressure in the G10 space as EURUSD gained just over 1% during the week. Although bearish pressure somewhat eased towards the end of the week as price traded around the 96.00 handle, the USD is still very much under pressure going into this week with Covid-19 cases still rising in parts of the nation with the New Jersey Governor signalling that the transmission rate has risen to the highest level in weeks whilst the Mayor within San Francisco mentioned that the reopening plans have been halted. Looking to the week ahead, it is likely to be a quiet week with only a few high impact data points set be released.
The Euro was the outperformer last week as the currency continued to make gains over the course of the week, EURGBP recovered its previous losses as price broke back above 0.9000 and gained over 1.5%. With rates being held as expected by the ECB, focus turned to the EU Economic Summit and the recovery fund discussions which are set to continue this week. The European Council President Michel proposed that the grants should be cut from €500bln to €400bln to which Denmark have outlined that they would be willing to accept this new compromise.
In addition to this, Brexit talks are set to continue this week with both parties yet to come to an agreement on the terms of their relationship moving forward. Hope of a quick fix agreement is fading leaving businesses and financiers in the dark about their future as little progress has been made since the meetings last month. Differences still remain between the two groups and a compromise will need to be met if we are to see any substantial progress in this area.
WTI Crude Oil
WTI Crude Oil is still yet to break and close above $41/bbl. as OPEC+ JMMC meetings took place last week. Producers agreed to reduce the output cuts to between 8.1mln – 8.2mln bpd against the expected 7.7mln. Saudi’s energy minister outlined that the changes will take effect from August and warned that the current prices are not positive for the industry and will lead to further bankruptcies. On the other hand, Russian energy minister Novak highlighted that though demand was down around 10mln bpd in July, the Oil market is stable, balanced and expects the oil output cuts to fall in line with the agreed schedule by OPEC+.
In the cryptocurrency space
In the cryptocurrency space, BTCUSD found support around $9,000 before rebounding higher and pushing back above $9,100. Price has now broken below the 50EMA which had been acting as dynamic support for a number of days. Ethereum on the other hand found support at the EMA earlier in the week and managed to hold above the $230 level, prices currently sit just shy of $240 at the time of writing. The rally on XAUUSD has slowed as the commodity now trades in a consolidative range between $1,796 – 1,817/troy ounce.
Here is a breakdown of the high impact data releases this week.
15:30 RBA Gov Lowe Speaks. Markets to watch: AUD Crosses
13:30 Core Retail Sales m/m. Markets to watch: CAD Crosses
08:15 French Flash Services PMI. Markets to watch: EUR Crosses
08:30 German Flash Manufacturing PMI & Flash Services PMI. Markets to watch: EUR Crosses