(22 JULY 2020)DAILY MARKET BRIEF 2:US Lawmakers Can’t Agree on Fresh Stimulus

In the commodity market, gold is getting closer to record highs as investors are embracing safe-havens amid US stimulus uncertainty and an increasing number of COVID cases. Gold futures have increased by 0.78% to $1,858, hitting the highest level in nine years and approaching the record peak.

The Sino-US tensions also make a good case for buying gold. The relationship between the world’s two largest economies is getting from bad to worse. Yesterday, the US Justice Department said that China funded hackers who targeted labs working on coronavirus vaccines.

Silver continues to rally as well, reaching the highest level in seven years after gaining over 6% on Tuesday. The white metal has surged about 15% since the weekend.

Oil is declining on Wednesday, after rallying yesterday. The American Petroleum Institute (API) reported an unexpected increase in inventories of 7.544 million barrels for the week. The sentiment is also suppressed by a surging number of COVID cases and related deaths in the US and worldwide. Yesterday, the US reported over 1,000 deaths for the first time since June. Moreover, President Donald Trump said the outbreak might get worse before calming down.

WTI futures are down 0.93% to $41.53 while Brent has declined by 0.78% to $43.97. On Tuesday, both brands added almost 3% after European leaders reached consensus on a massive stimulus package to support the economy. Vaccine hopes also fueled the rally.
In FX, investors ignored the greenback’s safe-haven status amid the pandemic and dumped it against majors as the US isn’t able to reach consensus on extending the stimulus programme. On Tuesday, the US Congress debated the extension of jobless benefits, which expire at the end of this month, and more funding to schools. The two parties are in disagreement over the figures, with Democrats asking for more new money.

The stimulus uncertainty doesn’t bode well for the dollar, especially when European leaders managed to unite for an unprecedented stimulus. The approval of a 750 billion euro stimulus package pushed the euro higher against majors. EUR/USD is now up 0.08% to over 1.1540, hitting the highest level in about 19 months.
Elsewhere, the British pound is down against the euro and even versus a weakening dollar as Brexit optimism is running out of fuel.