The US dollar remains vulnerable as the 10-year treasury yield declines to 0.65%.
Inflation in Japan hit a four-month high of 0.3% m-o-m in July, mainly due to a rise in food prices, though the core inflation remained flat at 0% y-o-y.
The Australian services PMI took a dive below the 50 mark on the back of rising coronavirus cases. But the retail sales grew 3.3% m-o-m in July, faster than analyst estimates. The AUDUSD has a steady grip near the 0.72 mark on the back of mixed data, and a softer US dollar.
Due today, the advance PMI figures in Europe and Britain should hint at a continuous rebound in economic activity both in manufacturing and services. But the August numbers could be revised to the downside due to the mounting Covid-19 cases across Europe, although the governments are unwilling to bring strict lockdown measures on the table to spare their economies from a second-wave hit.
There is now a chatter that the rising coronavirus cases in Europe and falling cases in the US could soon be a trigger for the much-expected downside correction in the EURUSD. The pair tested a fresh top above the 1.19 for the third week, but the bulls’ battle becomes harder approaching the thick layer of 1.20 offers.
British retail sales printed a 3.6% m-o-m advance in July, beating the analysts’ estimate of 2%. The yearly figure turned positive for the first time in five months, hinting at a gradual recovery in activity, although the headline figures hide important discrepancies among the underlying businesses. Meanwhile, the public sector borrowing fell unexpectedly below 26 billion pounds in July. The kneejerk positive reaction to encouraging data pushed the GBPUSD above the 1.3250 mark. We could see a further advance in sterling against the weakening US dollar before the weekly closing bell. But the medium-term sterling outlook remains negative on lingering pandemic and Brexit risks.
Gold remains bid above the $1925 per oz. Soft US dollar and yields, and a solid rebound in global inflation expectations amid massive fiscal and monetary stimuli, continues giving support to the yellow metal as investors see opportunity in topping up their holdings in price retreats.
WTI crude is preparing to close the week a touch below the $43 per barrel. The USDCAD remains offered near and above the 1.32 mark as steady oil prices and weak US dollar offer favourable conditions for a further appreciation in the Loonie.
