FX & market recap:
FX traders focused on EU Summit developments, or lack thereof. The so-called frugal four (Austria, Denmark, Sweden, and the Netherlands) balked at Germany, and France plans of a €750 billion Relief Fund, which included €500 billion in grants. The debate is ongoing.
Soaring Chinese equity markets underpinned AUD/USD and NZD/USD. The Shanghai Shenzhen soared 2.98%. The other major Asia equity indexes rose marginally, while European bourses are either side of unchanged.
There is not any US or Canadian economic data due today. EU Summit headlines and Wall Street will determine FX direction.
Canadian dollar highlights:
USD/CAD inched lower on the back of broad US dollar sentiment, but losses were limited. The domestic currency is an “after-thought” in global FX markets but may under perform in part due to the US/Canada border closure to non-essential travel, which is extended until August 21.
EUR/USD traded higher on the back of hopes that the EU leaders reach an agreement on the COVID-19 relief fund. Prices broke above the first layer of resistance at 1.1450 just before Europe opened. Europeans added to the gains, but the rally stalled at 1.1467. German PPI, and Eurozone Current Account reports were ignored.
British pound highlights:
GBP/USD had a down then up session. Prices dropped from Friday’s closing level of 1.2567 and hit 1.2520 in Asia. They started to rise just before Europe opened and then accelerated, reaching 1.2606 in early NY trading, coinciding with a drop in EURGBP. UK House prices rose 2.4% in July.
Asia Pacific highlights:
USD/JPY rallied from 107.03 to 107.55 in Asia, on hopes of an EU deal and another US stimulus package. However, the lack of progress with the EU talks, sent USD/JPY to 107.18 in NY. Meanwhile AUD/USD and NZD/USD chopped about in tight ranges with surging China equity prices, and a modestly positive risk tone, supporting prices.