Forex news from the European trading session - 21 July 2020
Headlines:
- China president Xi Jinping: Chinese economic recovery leads the world
- More US stimulus talks to follow in the day ahead
- Germany DAX erases losses for the year
- China says will take necessary measures to ensure firms' rights after US blacklist move
- Tokyo reportedly finds 237 new coronavirus cases in latest update today
- Switzerland June trade balance CHF 3.22 billion vs CHF 2.80 billion prior
- Silver on the move in break to fresh highs since 2016
- EU's von der Leyen: It is a pivotal moment in EU history
- EU reaches a deal on Recovery Fund
Markets:
- AUD leads, EUR lags on the day
- European equities higher; E-minis up 0.7%
- US 10-year yields up 1 bps to 0.62%
- Gold up 0.5% to $1,827.18
- WTI up 3.3% to $42.14
- Bitcoin up 1.8% to $9,342
The key highlight came in the wee hours of the European morning, where European leaders struck a compromise on the recovery fund. That led to a fall in the euro on a 'sell the fact' play, with EUR/USD easing from 1.1460 levels to a low of 1.1423.
But risk trades grew more optimistic on the headline and after the better tones from US trading yesterday, the risk-on mood continued into European trading today.
European indices built on gains with the DAX erasing its losses for the year with a climb of nearly 2% today, while US futures were more perky and up by ~0.7%.
That saw commodity currencies rally on the session, with the dollar falling across the board.
AUD/USD moved to its highest level since July 2019, rising from 0.7030 to 0.7080 levels. USD/CAD is also breaching below its 200-day moving average in a fall from 1.3515 to 1.3460, while NZD/USD is testing fresh highs since January above 0.6600.
Cable is keeping near 1.2700 with the 200-day moving average capping gains on the session thus far. Meanwhile, the euro is keeping a touch softer and hovering around 1.1440-60 levels against the greenback over the last few hours.
Elsewhere, silver is a notable mover amid a break above $20 to fresh highs since 2016. Gold is also underpinned with price up by 0.5% to $1,827.
With the Nasdaq putting in fresh record highs and the S&P 500 breaking key resistance to its highest levels since February, the risk rally looks poised to extend.
Let's see if that will be the case in the sessions ahead, but just be mindful that there will be key earnings releases still to follow on the week.
