GBP: Brexit talks restart tomorrow
EUR: Could move higher over quiet day
USD: USD unable to fight back

Sterling

Sterling really is treading water at the moment although movements in UK bond markets are signalling rises in inflation in the future that we need to keep an eye on in the coming months.

The most interesting thing for the pound may be beginning of the next round of Brexit trade talks that begin in Brussels tomorrow although we do not expect meaningful progress on the UK’s trade relationship with the EU until September and the return of the UK and EU parliaments from their respective summer recesses.

Euro

What is bad for the USD is almost intrinsically good for the single currency at the moment and today could easily be one of those days that see EURUSD drift higher in quiet markets. While we are seeing increasing concerns over lockdowns and travel restrictions in the Eurozone, we remain positive the currency heading into Friday’s flash-PMI numbers that should continue to show things moving in the right direction.

US Dollar

Markets remain happy to keep selling the USD and buying risk despite an increasing number of headlines suggesting that they should be doing otherwise.
The US and China have agreed to postpone further talks over their Phase 1 trade deal, signed last year but in need of changes already. Markets are taking this as a positive because postponed talks are better than cancelled talks or talks that end in a cancellation of a trade deal.

Further news on US stimulus has also not been positive with Republican and Democrat lawmakers still billions of dollars apart on how large a deal needs to be. Washington may take a back seat for a fortnight as we head into convention season; the Democrats kick off today with Biden’s speech closing the convention on Thursday before the Republicans work to the same schedule next week.

Once the conventions are over, we can gain a better idea of how polls are shaking out but for now it does look more than likely that Donald Trump will be running a different Twitter account come January.

The US data calendar this week is dominated by Wednesday’s minutes from the Federal Reserve but instead we will be looking at the earnings numbers from Walmart and Target for a closer look at how consumers are faring in the world’s richest economy. Walmart’s numbers are due tomorrow with Target on Wednesday.

Elsewhere

The NZD continues to slip on continued bets that the Reserve Bank of New Zealand will cut interest rates into negative territory at their next possible opportunity and news that the country’s election will be delayed by 4 weeks in a bid to quell a rise in Covid-19 cases. AUDNZD has broken through the 1.10 level for the first time in nearly two years on the news but further gains may be hard to come by given noises from Australian policymakers on containing the strength of the Aussie dollar.

Have a great day.