This is what you need to know to trade today Wednesday July 20:
Dollar selling seems to have taken a breather on Wednesday, with the DXY dollar index moving sideways above 106.50 after losing more than 1% so far this week. 10-year US Treasury bond yield fluctuates above 3% and US stock index futures trade flat after impressive recovery in risk appetite seen earlier in the week . Inflation data from Canada and US existing home sales in June will be the protagonists of today’s economic calendar. During the American session, the European Commission will publish preliminary data on the consumer confidence index for July. Finally, investors will pay particular attention to the 20-year US Treasury bond auction, which will take place at 17:00 GMT.
China reported more than 1,000 coronavirus cases for the first time since May 20 and investors are increasingly concerned about the introduction of new restrictive measures by the authorities of the country. Meanwhile, markets continue to lower expectations of a 100 basis point Fed rate hike in July.
Earlier in the day, data released by the UK Office for National Statistics revealed that UK inflation, as measured by the CPI consumer price index, jumped to 9.4% year-on-year in June from 9.1% in May. Although this figure was higher than market expectations of 9.3%, the British pound had a difficult time strengthening. Following encouraging labor market data on Tuesday and aggressive comments from the Bank of England (BoE) governor, investors appear to have already priced in a 50 basis point BOE rate hike in August. At the time of writing, the GBP/USD posts modest daily gains above 1.2000.
On Tuesday, the pair EUR/USD closed for the third consecutive time in positive territory, after being informed that the European Central Bank could opt for a 50 basis point rate hike at the next meeting on Thursday. The pair is still trading in positive territory around 1.0250 in European morning. Meanwhile, the Nord Stream 1 pipeline is reported to be operational again following the completion of annual maintenance on Thursday, but gas will be supplied at a reduced rate.
See: ECB Preview: Three critical factors to watch and why EUR/USD is going to crash
The AUD/USD rose to its highest level in three weeks on Tuesday, above 0.6900, and appears to have entered a consolidation phase early on Wednesday. Reserve Bank of Australia Governor Phillip Lowe reiterated during the Asian session that further rate hikes will be necessary in the coming months.
Pending policy announcements from the Bank of Japan, the USD/JPY it continues to move sideways in a tight range near 138.00.
The Prayed It continues to advance above $1,700 for the fourth day in a row and fails to make a decisive move in either direction. The rise in US bond yields does not allow XAU/USD to benefit from the general selling pressure surrounding the dollar.
The Bitcoin trading at its highest level in more than a month above $23,000 and the ethereum remains quiet near $1,500 after posting small daily losses on Tuesday.
Source: Fx Street
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