US dollar
The dollar is gaining ground on Thursday, after it was mired at a more than two-year low yesterday, as the Federal Reserve repeated a pledge to limit damage from the pandemic as surging new coronavirus cases hamper the economy.
The Fed’s policy statement released at the close of its two-day meeting directly tied the economic recovery to an end the coronavirus health crisis.
The U.S. epidemic has intensified since June, with an average of around 65,000 new cases detected each day, putting a brake on the rebound in economic activity and dashing hopes of V-shaped recovery.
The euro is trading near 1.1750 against the greenback. The common currency had hit a two-year high of $1.1807 and is on course to post its biggest monthly gain in 10 years, having risen about 5% so far this month. GBP/USD is pressured below 1.30 amid dollar strength, while USD/JPY rebounds in tandem with the US Dollar, above the 105.00 level.
Oil was mixed on Thursday morning, with prices rising after the U.S. Energy Information Administration recorded a huge draw in crude oil inventories. But gains were capped by the U.S. Congress’ squabble over the latest COVID-19 stimulus package as well as rising infections globally.
Gold witnessed another attempt to the upside on Wednesday and tested the record highs of $1981.34 after the Fed struck a dovish tone. On Thursday, the yellow metal is easing, as the Fed’s dovishness lifted the sentiment on the global markets, although the optimism was capped by the US fiscal wrangling and nervousness ahead of the key US Q2 Preliminary GDP report, due later today at 12:30 GMT.
Market participants now look forward to the preliminary German GDP and CPI reports for some impetus. The Eurozone’s largest economy is anticipated to have contracted by 9% during the three months to June.
The US economic docket highlights the release of the Advance Q2 GDP report, which is expected to show that the economy collapsed by 34.1% annualized pace. The data will play a key role in influencing the USD price dynamics and produce some meaningful trading opportunities later during the early North American session.