Here is what you need to know on Wednesday, August 5:
Stocks, bonds, and precious metals are on the rise while the greenback is falling alongside falling yields. Investors are eyeing slow progress in fiscal stimulus talks and top-tier US figures ahead of the Non-Farm Payrolls.
Gold has surged through $2,000, hitting a new all-time high of $2,030.85 before consolidating its gains on high ground. The precious metal is underpinned by fiscal and monetary stimulus, with the latest drive higher going hand in hand with the drop in global bond yields.
The return on ten-year US Treasuries is closer to 0.50%, nearing March’s lows. Yieldless gold looks more attractive on this background. Silver prices are also on the rise, with XAG/USD hitting $26.
See Hot Summer In Markets: Gold, silver, euro, and dollar volatility explained
US Fiscal stimulus: While Republicans and Democrats say they are far apart, they hope to reach a deal in the next few days and report making progress “bit by bit.”
Sino-American relations: Trade negotiators from the world’s largest economies will hold a meeting to assess how Phase One of the commerce accord is moving forward. Such meetings are a positive development after long weeks of clashes around a long list of issues.
ADP’s labor report is set to show an increase of over one million private-sector jobs in July. The publication will help shape expectations for the official Non-Farm Payrolls, even though the correlation has been lacking in recent months.
See US ADP Employment Change July Preview: Following the high-frequency data
The ISM Non-Manufacturing Purchasing Managers’ Index is forecast to decrease from 57.1 points in June but remains in growth territory. Apart from the headline figure, the employment component is closely watched as well, ahead of the jobs report. It is essential to note that the Manufacturing PMI beat on the headline but exposed a soft job market.
See US Non-Manufacturing PMI July Preview: Second thoughts on the US economy
Vaccine hopes: Novavax, a Maryland-based company, has been the latest to publish promising results in developing immunization for coronavirus. It joins a long list of companies, armed with funding from the US government.
US coronavirus: The case curve continues bending lower, an encouraging development. However, deaths returned to topping 1,000 per day after the weekend effect faded away.
EUR/USD has topped 1.18 once again, driven by dollar weakness. Final services PMIs are set to confirm the recovery in July.
GBP/USD is trading closer to 1.31, as the British government is criticized for keeping borders open for too long at the beginning of the coronavirus crisis.
NZD/USD is trading above 0.66, mostly benefiting from the greenback’s weakness but also underpinned by a lower-than-expected jobless rate in New Zealand – only 4% in the second quarter.
USD/CAD has dropped below 1.33, also pushed higher by the small increase in WTI Oil, which is around $41.50. Oil Inventories are due out later in the day.
Cryptocurrencies have stabilized on higher ground after several volatile days, with Bitcoin trading well above $11,000.
More Where next for the dollar, stocks and the US economy after downbeat data and the Fed
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