As the Republican National Convention got underway yesterday, the market struck a very positive tone following an upbeat message regarding Sino-American relations. It has been reported that US Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He have made significant progress on a recent phone call, and much more is to come.
This comes at a time when COVID-19 cases in the US are dropping. On Monday, the US reported fewer than 35k cases, which is the lowest in 2 months. Markets still maintain high optimism that a cure or vaccine will be found. Pharmaceutical company Moderna has reported that they have made progress on a vaccine, while also Pfizer announced it may ask for approval for its COVID-19 immunization candidate as early as October. The Financial Times also reported that the Trump administration may potentially fast-track an experimental COVID-19 vaccine being developed by AstraZeneca and Oxford University ahead of the November 3rd Presidential elections.
The upbeat tone helped the pushed the S&P 500 to new record highs, unfortunately for the dollar, pushing it lower. Despite the weaker dollar, there was no ‘sell-off’ in the market as investors refrained from placing aggressive bets ahead of the upcoming speech from Jerome Powell at the Jackson Hole Symposium later this week.
After starting the session trading at 1.1806, EURUSD capitalized on the dollar short, managing to climb a cent, closing the day off at 1.1901.
Negative news from the Brexit negotiations has done nothing to help the pound, capping its potential upside and forcing it to stay rangebound. Cable, with its gains limited, was unable to take full advantage of the dollar weakness on Monday. The pair opened the day at 1.3090, unable to break into the 1.31 territory, finished the day off trading at 1.3076.
GBPEUR also had a very rangebound day as it awaits further news on Brexit developments. The pair began trading at 1.1088, closing just slightly below at 1.1080.
On the data front, again, a quiet schedule today. At 07:00 the Germans released their Final GDP Growth Rate for Q2 – better than expected, coming in at -11.3%, compared to a forecasted -11.7%. Then at 09:00, we have the German IFO report, forecasted at 92.2; followed by CB Consumer Confidence from the US at 15:00.