1. Forex Preview: USD Continues to Dominate
Positive developments on the U.S.-China trade front have given the USD a big lift with a fresh round of negotiations between the two due to begin next week. As a gesture of goodwill, China has already started buying US Soybeans and is now waiting for the US to do their part and lift the ban on Huawei. The USD is the king in the ring presently; looking at the USD index we are at an important resistance level and the USD may turn lower again from here if the break does not happen soon. Watch for PMIs out of the US this afternoon for further input on the US economy and future USD direction. Elsewhere, expectations ECB could cut rates before the Fed kept the EUR subdued. The EUR/USD dropped lower deep into the 1.11’s ahead of tomorrow’s ECB pricing in a dovish ECB meeting with an overdelivering Draghi in his very last press conference. Watch for today’s EZ PMIs which could help or drag the EUR noticeably lower.*
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2. NZD and AUD Plummet
Elsewhere, the kiwi (NZD) experienced a panic selling which may not be over just yet, after the RBNZ hinted it may want to do something like an own QE. The AUD also edged lower against its rivals as the RBA seems to have run out of easing options and as other central banks prepare to slash rates.**
3. Boris Keeps GBP Subdued
Boris Johnson was elected as the new UK PM and made it clear that he seeks to exit the EU on October 31st. Everyone is now waiting for him to announce his cabinet members later today. Boris’ cabinet is expected to be manned by Brexit hardliners, which could result in a standoff in Parliament and may even trigger new elections. Unsurprisingly, Boris’ election win kept the GBP subdued.**
4. Oil Prices Edge Higher
Elsewhere, oil prices edged higher, extending gains as rising tensions with Iran fuelled concerns about supply disruptions and as a very big draw in the API’s last night boosted demand. Market participants will now be looking to the crude oil stocks later this afternoon for direction.***
5. Gold Steady
Spot gold (XAU/USD) sold a bit on the strong USD but still holding quite high and looks like it is just waiting for a new chance to climb back up. Escalating tensions in the Middle East could drive more buying interest towards the safe-haven metal, while a stronger dollar will continue to cap the dollar-denominated bullion’s gains.****
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*Bloomberg, Jul 24, 2019 03:07 AM ET
**Reuters Jul 24, 2019 3:53 AM ET
***CNBC Jul 24, 2019 2:48 AM ET
****FXStreet Jul 24, 2019 06:58 AM ET