Here is what you need to know on Wednesday, July 29:
Markets have somewhat calmed – potentially before next storm – after the massive dollar sell-off and gold's surge earlier in the week as tensions mount ahead of the Federal Reserve's decision. US coronavirus figures, slow-moving fiscal stimulus negotiations, and vaccine hopes are all in the mix.
Gold is stabilizing around $1,950, midway between the new high of #1,980 and the 2011 peak of around $1,921.50. Bank of American foresees $3,000 within 18 months. JP Morgan is bullish on XAU/USD in the short term, and Goldman Sachs sees the precious metal rising to $2,300. Silver, which has also seen a massive rally as well, is set to hit $30 within a year, according to GS.
The US dollar is licking its wounds after a sell-off early this week and stocks are edging lower as speculation around the Federal Reserve's decision is rising. The world's most powerful central bank is set to leave its policy unchanged after its massive monetary stimulus early in the year and as it has already signaled no rate hikes at least until 2022.
Jerome Powell, Chairman of the Federal Reserve, will likely be asked about its recent extension of lending programs, the potential for controlling the yield curve, and how lawmakers can play their part. Concerns about worrying signs related to the US economy could further weigh on the greenback.
See:
- Fed Preview: Warming up to controlling the yield curve, nudging lawmakers, keeping markets happy
- US FOMC July Preview: The advent of yield curve control?
US fiscal stimulus: Senate Republicans are unable to fully agree on the plan presented earlier this week by their own party days ahead of the expiry of federal unemployment benefits. The program includes slashing this support by a third, while Democrats prefer only a minor cut. Both sides are also at odds over liability issues, blame each other, and acknowledge talks are only at the beginning.
Without additional help, the world's largest economy could suffer, as personal expenditure would fall. The Conference Board's Consumer Confidence gauge dropped sharply to 92.6 points in July. Pending Home Sales for June are due out later in the day.
US coronavirus cases have stabilized around 60,000 per day while the seven-day rolling average of deaths continues climbing, topping 1,100.
President Donald Trump has repeated his optimism that a vaccine is coming shortly, adding to hopes expressed by top epidemiologist Anthony Fauci. Several Phase 3 trials are underway, with hopes of completing them in the late autumn. Russia will reportedly approve a vaccine within two weeks, in what is described as a "Sputnik moment" despite concerns about hasty development.
EUR/USD is holding up above 1.17 benefiting from the upbeat German IFO Business Climate and the agreement on the EU fund, while concerns about rising COVID-19 cases rise.
GBP/USD is above 1.29 as the UK extends its reopening. Brexit talks are going nowhere fast.
AUD/USD is trading around 0.7150 after downbeat Australian inflation figures. Both the headline and core Consumer Price Index were negative in the second quarter. Australian states have tightened travel restrictions as coronavirus infections remain elevated.
USD/JPY is hovering around the 105 level, above the trough of 104.50, which is the lowest since March. Tokyo's COVID-19 cases remain elevated.
Cryptocurrencies have also been consolidating their gains after the surge. Bitcoin is trading around $11,000, Ethereeum above $300, and XRP around $0.24.
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
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold reaches to all-time highs near $2,230, US PCE eyed
Gold price appreciates to all-time highs near $2,230 per troy ounce, attempting to continue its winning streak for the fifth successive session on Friday. However, trading volumes are light as market participants are likely observing Good Friday.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.