Here is what you need to know on Friday, July 24:
A risk-off mood has gripped markets, mostly driven by intensifying Sino-American tensions, but also disappointing data and rising coronavirus figures. Updated disease data and PMIs from all over the world will compete with international tensions.
Sino-American tensions: China has announced the closure of the US consulate in Chengdu, southwest China, in response for America's shuttering of the consulate in Houston. Beijing says Washington is responsible for the conflict and US Secretary of State Mike Pompeo called the Chinese regime "totalitarian."
Despite the deterioration, investors find solace in the trade deal – the world's second-largest economies seem on track to respect the Phase One accord signed early in the year.
Fiscal stimulus talks: Republicans and Democrats made progress in talks for the next fiscal relief package as the GOP dropped its demand for a payroll tax cut. However, the next round of talks will wait for Monday. One of the urgent topics on the table is extending federal unemployment benefits which expire at the end of the month.
Double-dip recession? Weekly US jobless claims rose to around 1.4 million in the week ending on July 17, the one when Non-Farm Payrolls surveys are held. Ending the long streak of declining applications raises concerns about the labor market and a potential double-dip recession.
Markit's preliminary US Purchasing Managers' Indexes for July are set to show a return to growth and sales of new homes carry expectations for further recovery.
See US Existing Home Sales Soar: Housing market metrics improve
US coronavirus cases topped the grim milestone of four million, while deaths surpassed 144,000. President Donald Trump canceled the Florida portion of the Republican convention as the disease rages in the Sunshine state, following on his move earlier this week to call on Americans to wear face masks.
S&P 500 futures and Asian shares responded by extending their losses while the safe-haven dollar made a comeback, recovering some of its losses in recent days.
Gold prices have stabilized below $1,900, the highest since September 2011 after nearing the round number on Thursday. Silver also remains bid.
EUR/USD is struggling with 1.16 after hitting 1.1625 late on Thursday, the highest since September 2018. The euro continues benefiting from the EU recovery fund agreed early this week, which keeps the continent's bonds bid. Markit's preliminary PMIs for July are set to show ongoing improvement.
See Eurozone PMIs Preview: Return to positive territory may complete bullish week for EUR/USD
GBP/USD is trading around 1.27, paring some of its gains amid dollar strength and the Brexit impasse. EU Chief negotiator Michel Barnier and his British counterpart David Frost took stock of talks on future relations and acknowledged little progress has been made.
The UK GfK Consumer Confidence missed with -27 and retail sales figures for June are eyed. Preliminary PMIs for July are due out later in the day.
See UK Retail Sales Preview: Comeback continues? Yearly figures, headwinds, could keep cable depressed
The yen is benefiting from safe-haven demand, with USD/JPY dropping below 106.50. Tokyo's coronavirus situation worries officials.
Commodity currencies are on the back foot amid the risk-off mood, with the Aussie shrugging off upbeat PMIs and the loonie ignoring the gradual advance in oil prices. WTI Oil has consolidated its gains above $41.
Cryptocurrencies are taking two steps forward, one step back, with Bitcoin taking a breather after topping $9,500.
More Hot Summer In Markets: Gold, silver, euro, and dollar volatility explained
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD rises to two-day high ahead of Aussie CPI
The Aussie Dollar recorded back-to-back positive days against the US Dollar and climbed more than 0.59% on Tuesday, as the US April S&P PMIs were weaker than expected. That spurred speculations that the Federal Reserve could put rate cuts back on the table. The AUD/USD trades at 0.6488 as Wednesday’s Asian session begins.
EUR/USD holds above 1.0700 on weaker US Dollar, upbeat Eurozone PMI
EUR/USD holds above the 1.0700 psychological barrier during the early Asian session on Wednesday. The weaker-than-expected US PMI data for April drags the Greenback lower and creates a tailwind for the pair.
Gold price cautious despite weaker US Dollar and falling US yields
Gold retreats modestly after failing to sustain gains despite fall in US Treasury yields, weaker US Dollar. XAU/USD struggles to capitalize following release of weaker-than-expected S&P Global PMIs, fueling speculation about potential Fed rate cuts.
Ethereum ETF issuers not giving up fight, expert says as Grayscale files S3 prospectus
Ethereum exchange-traded funds theme gained steam after the landmark approval of multiple BTC ETFs in January. However, the campaign for approval of this investment alternative continues, with evidence of ongoing back and forth between prospective issuers and the US SEC.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Fed might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.