Morning Report – Friday 31st July

Main Headlines

Gold is set for the biggest monthly gain in more than four years after a weaker dollar and low rates fuelled its surge to a record. Silver headed for its best month since 1979. Spot bullion is up 11% in July as a gauge of the dollar slump, prompting concerns its status as the world’s reserve currency of choice is at risk, and U.S. real yields fell to a record low. While the ferocity of gold’s rally cooled during the week, it is trading only about $10 off of the all-time high and most market participants predict there may be more gains ahead.

Apple, Amazon and Facebook jumped in after-hours trading, though advances for S&P 500 and EuroStoxx 50 contracts faded. Stocks underperformed overnight in Japan and Australia, amid record daily infections in Tokyo and a warning that curbs in Melbourne could be tightened. Shares in China and Hong Kong swung between losses and gains. The Bloomberg Dollar Spot Index is down 4% in July, on track for its worst month in a decade.

GBP

Sterling rose against both the dollar and euro yesterday however, Brexit related risks and the economic fallout from the coronavirus pandemic kept investors cautious on the currency’s longer term outlook. The pound hit new four month highs and is set for its tenth consecutive day of gains.

EUR

The euro continued its ascent making fresh two year highs against the dollar. Optimism from the EU recovery fund agreed last week, broad based greenback weakness and improved Germany business sentiment lent support to the common currency.

USD

The dollar slipped to new two year lows this morning and is on track to post its biggest monthly decline in ten years, as investors worry that a recovery in the U.S. economy would be hampered by the country’s struggle to stem the coronavirus epidemic. Confidence in the U.S. currency was undermined further after U.S. President Donald Trump raised the possibility of delaying the nation’s November presidential election.

Main Economic Data/Central Banks/Government (All Times BST)

7:00 a.m.: UK Nationwide House Prices
8:00 a.m.: Spain GDP
9:00 a.m.: Italy GDP
10:00 a.m.: Italy CPI
11:00 a.m.: Italy Retail Sales
14:45 p.m: US Chicago PMI