Risk-on dominated yesterday. Markets continue to bank on the coronavirus to have run its course and/or on medical breakthroughs to counter the infectious disease. And even if their expectations are proven wrong, there's still the hoped-for stimulus package in the US and other parts of the world should things go south again. Eco data (US CPI, EMU industrial production) had no significant impact. Equities rose about 1% in the EMU. US stocks rose up to more than 2%, overcoming a brief moment of weakness after House Speaker Pelosi rebuffed Mnuchin's renewed push for the $1tn relief package. The S&P500 inched closer to the pre-pandemic record high. Core bonds slipped. USTs slightly underperformed Bunds despite a solid record sized 10-yr auction, drawing a yield lower then WI. The US yield curve bear steepened with yields advancing 2.3 bps (2-yr) to 4.5 bps (10, 30-yr). German yields rose 2-4 bps across the curve. FX markets staged the classic risk patterns with respect to the dollar. EUR/USD rose from 1.174 towards the 1.18 barrier but finished just below. In a similar move higher, USD/JPY sought to claim 107 but closed at 106.91 eventually. Sterling failed to profit from the constructive environment though. UK chancellor Sunak sounded downbeat in a reaction to the historical Q2 GDP drop, tackling the pound. EUR/GBP jumped to 0.904.

Asian markets simply build on WS's performance yesterday. Most indices trade in positive territory with Japan (+2%) outperforming. Australia (-0.9%) is the exception to the rule – despite a stronger-than-anticipated labour market report (cf. infra). The Aussie dollar initially strengthened but is forfeiting gains at the time of writing. The kiwi dollar eventually put aside a (very) dovish RBNZ yesterday but is trading heavy again this morning. The central bank's chief economist said the RBNZ would like to have a weaker FX rate and lower bond yields. NZD/USD trades around 0.656. The US dollar trades unconvincing. The current mood (higher stocks) but declining core bond yields isn't really helping the currency. EUR/USD is trying to settle above 1.18 while USD/JPY is drifting lower to the 106.7 area.

We'll be keeping a close eye on US jobless claims today. With 1186k last week, the timely labour market indicator fell to a pandemic low. Consensus expects a further decline to 1100k. Markets would probably notice a (significant) negative surprise but we deem the odds of it rather low. Continuous claims are expected at a still extremely elevated 15800k. The 30-yr auction in the US is definitely worth following but shouldn't be a huge problem given successful auctions earlier this week. Futures markets point at some minor equity profit taking but we doubt it'll go very far and/or last long. Core bonds are being picked up after hitting technical support. The dollar might thus remain in the defensive in a daily perspective. EUR/USD 1.1823 resistance looks vulnerable. A series of US eco data (incl. retail sales) tomorrow might be important for the USD going forward. EUR/GBP is going nowhere, facing a technical driven trading day ahead near the 0.90 pivot. News



Fed officials in a slew of speeches voiced concerns over the virus and its impact on the economy. Boston's Rosengren said states shunning expert advice will likely prolong the downturn, adding that the recovery may be losing steam. His warning was later echoed by Fed's Kaplan. SF Fed Mary Daly foresees a second whammy, expecting a W-shaped recovery instead of a V.

Australia's July labour market report came in stronger than expected. Australian job creation rose a strong 114.7k, beating estimates (30k) and following an upwardly revised June (228.4k). Full time employment (+43.5k) recovered for the first month since the pandemic. The unemployment rate ticked higher to 7.5% (up from 7.4%) but less than expected even as the participation rate (64.7%, up from 64.1%) rose (more than consensus).

Download The Full Sunrise Market Commentary

This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis

Latest Forex Analysis

Editors’ Picks

AUD/USD battles 0.7700 amid covid, stimulus woes-led risk-aversion

AUD/USD holds the lower ground, testing the 0.7700 level amid broad risk-aversion that has triggered a bounce in the safe-haven US dollar. Uncertainty over the US stimulus, worries over new covid strain and lockdowns weigh on the risk appetite. 


GBP/USD pressured towards 1.3650 amid risk-off, ahead of UK jobs

GBP/USD remains depressed, heading towards 1.3650. The cable responds to the fresh risk-off mood after flashing a two-day losing streak. UK virus data suggests an improvement in covid conditions, Health Secretary Matt Hancock gives credits to activity restriction measures.


Gold: Bulls target daily extension

Gold is on the verge of an upside extension on a break of weekly resistance. XAU/USD is making progress with respect to the bullish market structure following a period of consolidation in recovery of the daily correction.

Gold news

Ripple is South Korea’s most popular cryptocurrency, but XRP price stays pressured

XRP/USD bounces off intraday low of 0.2647, stays below 21-day SMA for fifth day. As per the latest report from Messari, Bitcoin and Ripple are the most popular cryptocurrencies in South Korea.

Read more

US Dollar Index: A breach of 90.00 exposes 2021 lows at 89.20

The inability of USD-bulls to push further north of recent tops in the 91.00 region in past sessions prompted sellers to return to the markts and shifted the attention to the potential continuation of the downtrend.

US Dollar Index News

Forex Majors