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EUR/USD 4-Month High before ECB

Chart of the Day: EUR/USD (4hr candlesticks)
Source: GKFX / MT4 (July 15, 2020)

EUR/USD touched a 4-month high on Wednesday but closed near session lows. A breakout into a new uptrend would have greater confirmation after a daily close above 1.14.

Good morning. The market news and price moves we are looking at today include:

•    Markets rise on Oxford COVID-19 vaccine trial reports
•    ECB Meeting Preview
•    Apple wins court case versus EU
•    Goldman Sachs shares jump after  blowout Q2 earnings
•    DAY AHEAD: China GDP, UK unemployment, ECB Rate Decision, US Retail Sales
•    CHART: EUR/USD 4-month high


 

MARKETS


The euro led FX markets higher with a fresh 4-month top in EUR/USD but ended up finishing well off its highs. Sterling too saw big gains with GBP/USD crossing over 1.26 before turning lower.

Shares on Wall Street finished in positive territory on optimism over vaccine developments and following blowout earnings from famed investment bank Goldman Sachs. Heightened tensions between the US and China saw shares in China turn lower, while the Kopsi and Nikkei closed higher. European shares closed up.

The price of oil jumped on a surprise draw in US inventories, gold treaded water and silver added 1.5% in a continuation of the breakout to 10-month highs.
 

GURU WISDOM


“In the business world, the rear-view mirror is always clearer than the windshield.” – Warren Buffett
 

Another vaccine


A double dose of good vaccine news was a boost to market sentiment. The COVID-19 vaccine from US pharmaceutical company Moderna produced a “robust” immune response and a report from ITV’s Robert Peston suggested that the Oxford Covid-19 vaccine backed by AstraZeneca is set to report good trial results soon. The positive response in markets shows the weight investors are attaching to a vaccine to end the pandemic.
 

EUR/USD & ECB Preview

ECB President Christine Lagarde recently said the ECB has “time to assess the effectiveness of the stimulus so far.” That stands to reason given the expansion of the PEPP bond-buying program at the June meeting and the subsequent resolution to the German constitutional court issue.  We suspect the topic of conversation may shift to more benign topics from a markets standpoint (like climate change) meaning little impact on the euro.
 

Apple Tax

Apple shares gained after the world’s biggest company by market cap won its appeal against the European Union ruling over its tax status in Ireland. Apple will not have to pay Ireland the $14.9 billion in back-taxes. It’s a setback on attempts to crackdown on sweetheart tax deals in member countries.
 

Goldman Earnings    


A new record in Fixed Income Currencies and Commodities (FICC) trading revenues at Goldman Sachs saw earnings spike beyond expectations. The plunge in markets caused by the coronavirus pandemic saw trading activity at the bank double in Q2 compared to last year. The strong investment activity distracted from an increase in loan loss reserves for future quarters. 
 

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