Here is what you need to know for Friday the 10th July:
The US dollar outperformed with relentlessly rising US COVID cases worrying investors to the point where the US benchmarks were mostly lower by the close of play.
Election-year political uncertainty is also biting with the Supreme Court ruling on President Donald Trump’s financial records alarming investors.
The US Supreme Court rejected President Trump’s claim for absolute immunity in shielding his corporate and personal tax returns.
There were also trade war tensions coming back to the fore which had supported the greenback since 2018 since the Trump administration declared a war on trade with China.
Economic releases were again scarce.
Initial claims were better than expected
US jobless claims were more encouraging than expected, but only on the surface. The job market is a deep-rooted problem for the US which path of least resistance is worrying.
Initial claims were better than expected falling 99k in the week ended 4 July to 1.314k vs expectations of 1.375k.
Encouragingly, continuing claims fell 700k to 18.06m suggesting return to work is continuing despite the recent rise in COVID-19 cases.
However, the number of people claiming benefits under the Pandemic Unemployment Assistance program has risen exponentially, and this is something that will be amplified in data to come within extreme stresses in the US jobs market.
Markets focus on high-frequency data and daily COVID-19 news
Evidence is mounting that the economic recovery in key metropolitan areas is stalling pertaining to the spread of the virus.
However, that didn’t stop the US benchmarks to rebound off the lows and from the NASDAQ making record highs, again – markets are still being patient, banking on economic recovery.
The next stage of US fiscal stimulus is expected to be announced July 20-31 according to Treasury Secretary Mnuchin and the Federal Reserve will do whatever it is required.
EUR: EUR/USD uptrend intact unless above 30-day moving average support at 1.1257 and until the dollar index overcomes resistance at 97.09.
GBP: Risk aversion weighed on GBP/USD’s July rise at 1.2668 with bears testing bull’s commitments at the confluence of the upper 21-day Bolli, 200-DMA.
JPY: USD/JPY lost its footing although better plays were in the crosses as yen picked up a safe haven bid. 107.10 supports vs the greenback. A break here opens risk towards 106.70, the weekly Kijun and monthly Tankan.
AUD: Bears held up at the rising trendline with price pricing below 0.7000. Hourly support was near 0.6958 at trendline support. Bulls look for sturdy equity prices, but further tests of support likely and sustain breakout opens risk to 0.6940 and 0.6897 38.2% and 61.8% respective Fib retracements. Eyes also on copper as gains erode while yen and greenback are bought, weighing on the near-term outlook.
Commodities: WTI and Brent retreated, weighed by both technicals and by US COVID-19 contagion as well as dim prospects for travel.
Looking ahead, the calendar is light until the U.S retail sales on Thursday.