FOMC Meeting Minutes fail to strengthen Greenback

The US notched more than 52000 new COVID 19 cases in 24 hours Wednesday, reported by JohnsHopkins University. This is the new record of infections around the country. 52898 more cases was recorded as of 8.30 pm Wednesday, so the total number of cases in US counted to 2682270.

Public health experts on Wednesday criticized the US for securing a large supply of the only drug licensed so far to treat COVID 19.US Government announced that it had signed an agreement with Gilead Sciences to make the bulk of their production of remdesivir for the upcoming three months.

The minutes of the June FOMC meeting reveal that the Fed is leaning toward enhanced forward guidance and away from yield curve control at least for the time being. Participants agreed that they had experience with asset purchases and forward guidance and that these are effective tools. They leaned toward outcome-based forward guidance and indicated that more guidance would be needed in the coming months.

Central bankers on the Federal Open Market Committee voted then to hold their benchmark short-term borrowing rate in a range of 0%-0.25% and said that rate likely would prevail until the economy “had weathered recent events.”

According to the US ADP Non-Farm Employment Change report Private payrolls grew by 2.369 million for the month, a bit lower than the 2.5 million expectation from economists surveyed by Dow Jones, according to a report Wednesday from ADP and Moody’s Analytics.

 EUR/USD 4 Hour Chart:

Support: 1.1199 (S1), 1.1147 (S2), 1.1109 (S3).

Resistance:  1.1289 (R1), 1.1327 (R2), 1.1379 (R3).

Although FOMC meeting and US ADP data is favorable, Investor’s worries on the rising cases of COVID 19 in US and US-China tension pressures USD. We expect a bullish trend for EUR/USD.

Japan’s Manufacturing PMI data conveys economic recovery of the country

Quarterly Tankan Manufacturing and Non-Manufacturing data from Japan prints upside momentum which favors yen. Growing expectations of a recovery led business sentiment to jump back into positive territory for the first time since February. Chief Cabinet Secretary Yoshihide Suga said today that Japan is currently not in a situation to declare a state of emergency but could do so in a worst-case scenario.

The capital Tokyo tries to keep new cases below 20 a day since Japan lifted a state of emergency on May 25, but has had five straight days of more than 50 new cases as of Tuesday, when 54 infections were reported. Still, Tokyo along with the rest of Japan has had a lower rate of infection than many countries. Japan has had nearly 19,000 diagnosed with 974 deaths.

US records a death toll of 129,000 and now corona virus cases have reached over 40,000 cases for the 5th time in the past 6 days and the new cases could more than double to 100,000 per day if the current surge spirals further out of control, the government’s top infectious disease expert has warned, although he was “cautiously optimistic” a vaccine would be available early next year.

“Clearly we are not in total control right now,” Dr. Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases, told a U.S. Senate committee. “I am very concerned because it could get very bad.”

 USDJPY 4 Hour Chart:

Support: 107.63 (S1), 107.34 (S2), 107.17 (S3).

Resistance: 108.10 (R1), 108.27 (R2), 108.56 (R3).

The increasing strength of yen and rising infection of corona virus in US pushes greenback and sets a bearish trend for USD/JPY.

Optimistic RBA Deputy Governor’s speech favors Aussie

RBA deputy governor Guy Debelle, in a webinar address to the Economic Society of Australia on Tuesday, said that country is showing better signs for the economy but still the country is facing a historically large decline.

The Board has announced a target for the three-year Australian Government bond yield of around 25 basis points. While embarking on $50 billion of government debt purchases to control market interest rates. The economy contracted by 0.3 percent in the March quarter with the bank expecting GDP to shrink by 8 percent for the 2019-20 financial year. The Reserve Bank’s daily market operations were expanded in size and in maturity in response to the large increase in demand for liquidity from the banking system. RBA sets the rate paid on Exchange Settlement (ES) balances at 10 basis points.

Payrolls were down by 8.8 percent in mid-April and have now recovered to be down by 6.4 percent.”The recovery in payroll jobs between mid-April and mid-June represents around 30 percent of the jobs initially lost,” said Mr.Debelle.

Recent data indicates that the economic condition is far better than expected. Mr.Debelle also added that “There is considerable uncertainty over the path from here,” “This uncertainty includes the behavioral responses as health restrictions are eased. There is also considerable uncertainty about the future, which will affect the decisions of businesses and households.”

AUD/USD 4 Hour Chart:

Support: 0.6841 (S1), 0.6817 (S2), 0.6792 (S3).

Resistance: 0.6890 (R1), 0.6915 (R2), 0.6940 (R3).

Speech of Mr.Guy Debelle, RBA Deputy Governor shows signs of better economic condition in Australia which sets a bullish trend of AUD/USD.

UK Prime Minister’s optimism braces pound

Prime Minister Boris Johnson vowed that the U.K. will spend large sums on hospitals, schools, and roads to jump-start the economy as it emerges from the corona virus lock-down that has plunged the country into what may be the worst recession in three centuries.

In an interview, Johnson rejected a return to the austerity policies that followed the 2008 financial crisis and told that the country will “build our way back” from the crisis through “shovel-ready” projects.

“The lesson is to act fast and we’re going to make sure that we have plans to help people whose old jobs are not there anymore to get the opportunities they need,” Johnson said. “We are absolutely not going back to the austerity of 10 years ago.”

He also added that the government will set out measures to boost infrastructure construction.PM Johnson will unveil an additional $1.23 billion to build the first 50 projects comprising schools Interior minister Priti Patel said on Sunday. Johnson, who won a large majority at last year’s election, hopes to revive his fortunes by returning to his pledges to “level up” Britain by focusing spending on traditional Labour-supporting areas that backed his Conservative Party.

The EU and Britain launch an intense five weeks of negotiations on a deal to define their post-Brexit relations on Monday, with London keen to wrap things up quickly. The new round of talks in Brussels will be the first to be held face-to-face since the corona virus shutdown combined with the two sides entrenched positions to stall progress.

 GBP/USD 4 Hour Chart:

Support: 1.2287 (S1), 1.2240 (S2), 1.2165 (S3).

Resistance: 1.2410 (R1), 1.2484 (R2), 1.2532 (R3).

Borish’s government measures and Brexit updates favors pound. We expect a bullish trend for GBP/USD.