Forex Today: Dollar’s decline continued on US-Sino tensions, coronavirus

Here is what you need to know on Thursday, July 23:

 The dollar continued to shed ground against most of its major rivals, but the JPY, reaching fresh multi-month lows across the board. The greenback decoupled from equities, with Asian and European indexes down and US ones mixed on the day.  The decline seems a continuation on Tuesday’s unidirectional movement.

The market’s mood was sour, amid escalating tensions between the US and China. The US State Department ordered Beijing to close its consulate in Houston within 72 hours, while China is considering the closure of the US consulate in Wuhan. There were no news related to the trade deal between the two economies, but this tense situation is bad news for future global trade.

The US Senate is struggling to agree on the next coronavirus-aid package, which could potentially mean another $1 trillion.

EUR/USD flirted with 1.1600, ending the day not far below it, as investors continue to celebrate the agreement on the EU recovery fund.  ECB’s President Christine Lagarde hit the wires this Wednesday and said that the economic outlook remains uncertain, although clarified that the central bank’s baseline forecasts take into account a second coronavirus wave. She also said that the recovery fund agreed by EU leavers is “reasonable.”

The Pound fell on Brexit woes but trimmed intraday losses on the back of the dollar’s weakness. GBPUSD ended the day little changed at around 1.2740.

Commodity-linked currencies extended their rallies to fresh multi-month highs against the greenback, correcting lower ahead of the close, still strong.

Coronavirus: the pandemic continues to take its toll on global economies, with roughly 240,000 cases reported in the last 24 hours, over 60,000 just in the US. President Trump has expressed concerns regarding the outlook for the pandemic, saying that things would get worse before getting better. The country would pay almost $ 2B to secure hundreds of millions of doses of the Pfizer/BioNTech coronavirus vaccine that Americans would receive for free.

Brexit: The UK government is said to be working on the assumption that there will be no deal by year-end with the EU, as “significant differences” persist. Instead, the future trade relationship with the EU will likely be in WTO terms.

Gold surged to a multi-year high of $1,870 a troy ounce and is set to keep advancing.  Crude oil prices trade stable at around their recent highs, with WTI settling around $ 42.00 a barrel.

Stocks settle in the red in Asia and Europe. US indexes struggled to post gains, with Wall Street mixed.

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