US dollar
The dollar bounced off a two-year low on Tuesday as selling pressure faded ahead of a Federal Reserve meeting and as political wrangling over the next U.S. fiscal rescue package moved closer to a conclusion. The world’s reserve currency has been tumbling since May and was dumped in recent days as cracks in the U.S. coronavirus recovery and crumbling yields sent investors elsewhere.
On the virus front, U.S. infection rates may be stabilising, with a 2% drop in the number of new cases last week – but the economic impact of curbs to restrict its spread and of job losses are only beginning to be felt. Global Covid-19 deaths topped 650,000, with the number of cases topping 16.4 million as of July 28, according to Johns Hopkins University data.
The Japanese yen weakened 0.4% to sit just below its strongest since mid-March at 105.55, and the euro was last 0.2% softer at $1.1728. GBP/USD trades back above 1.2850, pressured by broad US dollar recovery.
Oil prices were largely unchanged Tuesday, with U.S. crude futures traded 0.3% lower at $41.49 a barrel, while the international benchmark Brent contract rose 0.1% to $43.92. Traders will be watching out for U.S. inventory data due from the American Petroleum Institute industry group later today.
Gold prices hit a record high on Tuesday morning in Asia, supported by a weakening dollar that is driving demand for the safe-haven yellow metal, however the yellow metal dropped nearly $35 in the following session.
In the absence of any major market-moving economic releases from the UK and the EU, focus shifts to the US economic docket with the release of the Conference Board’s Consumer Confidence Index and Richmond Manufacturing Index.