Euro Holds Steady as Investors Eye EU Summit

EUR

The single currency continued to hover in a tight range as market participants look forward to the EU leaders meeting. Yesterday, the European Central Bank concluded its monetary policy meeting by keeping policy settings unchanged. Lagarde declared that the outlook remains highly uncertain, but there are signs that the economic activity has bottomed in April, and the ECB has slowed the Pandemic Emergency Purchase Programme (PEPP) purchases as the markets stabilized. The EU summit overshadowed the ECB policy meeting. Investors are awaiting whether the EU leaders will be able to reach an agreement on the recovery fund, which could boost the economic recovery. The EURUSD is hovering near $1.14, the EURAUD held steady near 1.63, and the EURJPY stood at 122.

USD

The dollar index, which measures the greenback against a basket of major currencies, rebounded slightly to 96.40, supported by flows to safer currencies. The soaring coronavirus cases around the world continued to threaten the economic recovery and weigh on investors' risk appetite. The US Retail Sales rose 7.5% in June beating estimates of 5.0%, but the jobless claims rose 1.3 million versus an expectation of 1.25 million, raising concerns over the implication of the recent outbreak on the labor market.

Equities

Major US stock index futures settled lower last night amid concerns that the record coronavirus cases could disrupt the economic activity again. Yesterday, the US reported 77,000 new confirmed COVID19 cases, a new single-day record, pushing the total number of cases to above 3.5 million. Corporations are moving to work remotely again to avoid further transmission of the virus. The Dow Jones Industrial Average futures declined to 26465, the S&P500 futures dropped to 3188, and Nasdaq futures fell to 10474.

Metals

Gold prices continued to trade in a tight range awaiting fresh fundamental drivers. The price of a gold ounce has been trading near its highest level since 2011, between $1790-1818, the price of a silver ounce held steady near $19, while palladium futures dipped to $2005.

Oil

Oil prices eased a little amid growing concerns over the recovery of demand levels as Coronavirus cases continued to mount. Moreover, the decision from OPEC+ to lessen output cuts by around 2 million barrels in August is raising fears of oversupply again. The West Texas Intermediate crude August delivery declined to $40.29, and Brent blend September delivery descended to $42.86.

Major Economic Events

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