FX Update – July 22 – Dollar & Yen Down
<h3>AUDUSD, H1</h3>
<p>The Euro, along with the Aussie and Kiwi Dollars, posted fresh highs against the Dollar and Yen, despite a backdrop of flagging stock markets. <strong>EURUSD</strong> reached its highest level since January 2019, at 1.1547, the culmination of what has now been a five-week rally. <strong>EURJPY</strong> pegged a fresh six-week high at 123.34. Most other Euro crosses are also firmer, though remain below recent highs. <strong>Cable</strong> has moved below 1.2700, to 1.2660, below Tuesday’s six-week peak at 1.2768. <strong>USDJPY</strong> plied a narrow range just above the one-week low seen yesterday at 106.68, while <strong>EURJPY</strong> and the risk-sensitive <strong>AUDJPY</strong> scaled to respective six-week highs. <strong>GBPJPY</strong> and <strong>CADJPY</strong>, in contrast, remained below their respective six-week highs, which had been printed yesterday. <strong>AUDUSD</strong> reached a <span><span>new 15-month peak at</span><strong> 0.7165</strong></span>, while <strong>NZDUSD</strong> ascended further into 18-month high territory. <strong>USDCAD</strong> settled around the 1.3450 mark, above the six-week low seen yesterday at 1.3422, concomitant with front-month <strong>USOil</strong> futures at $41.50, below the three-and-a-half month peak that was left at $42.40 yesterday.</p>
<p>Gold and silver prices have continued to surge, reflecting investors’ expectation for global monetary stimulus taps to remain open and the Dollar to remain weak. The gains in the non-yielding assets also reflect concerns that inflation might spike as a consequence of the stimulus. <strong>XAUUSD</strong> rallied to <span><strong>$1865</strong></span> earlier before cooling to the $1850 zone, whilst <strong>XAGUSD</strong> ran to <span><strong>$22.80</strong></span> (October 2013 highs) before trimming gains to R1 at $21.70.</p>
<p>In other news, the UK’s Telegraph newspaper reported that <em><strong>the UK government is pessimistic about reaching a trade deal with the EU</strong></em>, just days before Prime Minister Johnston’s end-of-July deadline for reaching a deal in principle. The FT also reported, citing unnamed senior government officials, that the UK government has abandoned hopes for reaching a trade deal with the US before the presidential election in November, which means that there will be zero hope for a deal by the time Britain leaves the EU’s single market at the end of the year. The pandemic gets the blame for the slow progress.</p>
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<p><strong>Stuart Cowell</strong></p>
<p><strong>Head Market Analyst</strong></p>
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