Forex Today: Earnings saved the day
|Here is what you need to know on Wednesday, July 15:
The FX market continued to depend on equities for direction. The dollar traded with a firmer tone against most of its major rivals at the beginning of the day amid a dismal market mood triggered late on Monday by coronavirus-related headlines in the US.
Wall Street, however, managed to recover the ground lost and post substantial gains on the back of solid earnings reports from big banks such as Citigroup and JP Morgan. There’s a trick, as banks’ revenues are directly linked to Fed’s massive stimulus measures meant to prop up credit markets.
The EUR/USD pair flirted with the year high, trading as high as 1.1406, despite a disappointing ZEW report.
GBP/USD ended the day flat at around 1.2550, with the Pound undermined by GDP figures. Monthly GDP was up by 1.8% in May, below the 5% expected. The NIESR GDP estimate for the three months to June came in at -21.2%, worse than anticipated, and after printing at -19.1% in the previous month.
Swiss National Bank chief Jordan was on the wires, saying that FX interventions are the most-effective instrument to curb CHF, adding that negative rates are essential. The SNB usually intervenes in the market without notice, and market players have become used to it.
Commodity-linked currencies held within familiar levels, following the lead of equities for intraday direction. AUD/USD settled around 0.6940, while USD/CAD finished the day just above 1.3600.
Spot gold dipped to $ 1,790 a troy ounce but bounced back to settle at $1810. Crude oil prices held within familiar levels, with WTI settling at $40.20 a barrel ahead of the API report.
The focus is now on the BOJ monetary policy decision.
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