The markets initially continued in line with their trends after yesterday’s Fed meeting but have since reversed course. Equities and precious metals have erased some of their recent gains while the dollar is seen bouncing against all of its major counterparts in early trading on Thursday.
Federal Reserve Chair Jerome Powell cautioned that the economic recovery hinges on the ability to contain the Coronavirus.
He expressed optimism regarding the recovery in the labor markets but also indicated that economic indicators are suggesting the economic recovery may have stalled.
Nevertheless, policymakers remain data-dependent and will continue to assess incoming economic reports and progress in containing the virus.
Powell commended the government after an announcement earlier in the week of a new potential fiscal stimulus package that is said to be worth around $1 trillion. The Fed Chair reiterated that ongoing fiscal and monetary support is needed to aid the economy in its recovery after an economic downturn he called “the most severe in our lifetime.”
Later in the North American session, the US will release GDP figures for the second quarter. Analysts expect the economy to have contracted a staggering 34.5%.
The unemployment rate in the euro area was reported to rise to a 15-month high of 7.8% in June. Ahead of the report, the jobless rate had held steady between 7.3%-7.4% for five straight readings.
The 1.1800 handle has proven to be a major hurdle as EUR/USD has made two failed attempts at the level this week.
There is some potential for a retracement at this stage, especially considering that the exchange rate is quite oversold.
The antipodean currencies are the heaviest in early trading on Thursday, and technical developments in AUD/USD and NZD/USD may offer a leading signal for the dollar’s next move.
Near-term support for the pair is seen at 1.1700 while it will take a break above 1.1800 for the pair to regain upward momentum.
- The markets have reversed course in early trading today. The dollar is recovering and the Antipodean currencies are hit the hardest.
- GDP data will be released later in the day. As it is the first reading, a volatile reaction may be seen in the markets.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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