US Markets

BUZZ-COMMENT-US recap:Dollar heavy as euro eyes March high, EU summit extends, COVID-19 hopes rise

The dollar, yen and franc havens struggled against the euro as fears about the extended EU summit faded [nL5N2ER21R], sending the 10-year BTP-Bund yield spread to its lowest point since the March 26 trough. It appears enough progress has been made in the talks to suggest a somewhat watered down rescue plan will eventually be inked.

July 20 (Reuters) - The dollar, yen and franc havens struggled against the euro as fears about the extended EU summit faded , sending the 10-year BTP-Bund yield spread to its lowest point since the March 26 trough. It appears enough progress has been made in the talks to suggest a somewhat watered down rescue plan will eventually be inked.

EUR/USD’s push to 1.14675 (EBS) is its highest level since its 1.1495 March 9 pandemic peak, with 1.1500 seen as quite pivotal, particularly on a closing basis.

The global risk profile improved in New York, weighing on the dollar, after a string of reports of promising vaccines and treatment trials. This in the face of record new cases in the U.S.

Potential Chinese retaliation against Europe’s Nokia and Ericsson if the EU moves to ban Huawei , may have contributed to early long euro profit-taking in New York, but that dip was bought.

The dollar index is probing June’s 95.71 low, the post-March Fed FX swap line expansion nadir, but needs EUR/USD to breakout above 1.1500 to test its March low at 94.63 .

Sterling was boosted by EUR/GBP selling on EU aid intransigence. That helped propel GBP/USD back up by repeated July highs just under the 200-day moving average and June’s rebound high.

High beta currencies mostly gained, along with the CNY.

The late start to today’s EU summit likely means it will end after the bulk of trading for the day has passed.

Attention, beyond pandemic news, will shift toward Congressional negotiations on a fifth coronavirus mitigation plan that must be reached before month-end, then on to global PMIs out Friday, with looks at U.S. claims data and corporate earnings reports along the way.

For more click on [FXBUZ] (Editing by Terence Gabriel Randolph Donney is a Reuters market analyst. The views expressed are his own.) ((Randolph.Donney@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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