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The dollar index (DXY) traded to a fresh multi-year low overnight at 92.521, the lowest level since May of 2018. A weekly break below support at 92.500 will suggest further weakness to the next support level at 90.860, another 1.77% decline.

The dollar’s performance against the major currencies overnight is a mix of small gains and losses, -0.40% vs. GBP, -0.11% vs. JPY, -0.11% vs. NZD, -0.06% vs. JPY, and -0.03% vs. AUD. The dollar has gained 0.32% vs. MXN, 0.17% vs. CAD, 0.07% vs. EUR, and 0.03% vs. CHF.

The USD/CAD is in its 5^th consecutive monthly decline, currently -5.58% since the March close at 1.4059. Near-term support is seen at 1.3200 and longer-term support at 1.3025.

It is hard to ignore gold’s current run, up by another 0.93% today which brings its weekly gain to 4.13% and YTD gain to 35.76%. Silver is higher by 4.92% today and has gained 58.41% this year.

Initial Jobless Claims released today for the week ending Aug 1^st were reported at 1.186k, better than the 1.400k estimate, and the lowest reading since the pandemic induced late March spike.

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The dollar index is trading in a holding pattern following Friday’s whipsaw session where the index traded to a low of 92.546 (-0.51%) but managed to close at 93.349 (+0.35%). The DXY has now posted two consecutive daily gains for the first time since late June as dollar bears take off short positions to lock in gains. Support for the DXY is now at 92.500, and minor resistance at 94.000 and significant resistance at 95.750.

The market’s turn towards dollar strength over the last three days is in line with a general shift towards safe assets… stronger CHF, lower equity prices, and lower treasury yields. The dollar’s widest gains today are vs. the ZAR (+1.60%), and MXN (+1.11%). Performance against the G10 currencies: +0.62% vs. GBP, +0.38% vs. SEK, +0.32% vs. NZD, +0.30% vs. NOK, +0.26% vs. EUR, +0.20% vs. CAD, +0.15%vs JPY, and +0.06% vs. AUD.

USD/MXN: the dollar has gained 3.84% vs. the peso since July 29^th. Support and resistance for the pair is bounded by the high/low range for the last 6-weeks, 23.220 – 21.8200.

This week’s economic data releases include:

Today: Durable Goods Orders

Wednesday: MBA Mortgage Applications; ADP Employment Change; Trade Balance

Thursday: Initial Jobless Claims

Friday: Nonfarm Payrolls

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Weekly Initial Jobless Claims reported today for the week ending July 25^th showed an increase of 1.434mio news claims, slightly better than the 1.445mio estimate. This was the second consecutive weekly gain following last week’s revised 1.422mio new claims. This is a troubling new trend for the Fed after the previous 16 weeks of steady declines. Today’s claims are almost 7 times higher than the pre-virus weekly average of 208k claims.

In yesterday’s policy announcement the FOMC left the official rate unchanged as expected. The Fed reiterated its commitment to use 'its full range of tools to support the U.S. economy' to promote maximum employment and price stability. The Fed's focus is clearly on the ongoing impact of the coronavirus stating that ' The path of the economy will depend significantly on the course of the virus.'

The dollar is mixed against the G10 currencies today, reflected in the US Dollar Index which is slightly lower by 0.11% at 93.338. The dollar has declined 0.36% vs. the GBP and -0.08% vs. the CHF. The dollar is higher by 0.82% vs. the NOK, +0.54% vs. CAD, +0.51% vs. AUD, +0.12% against the JPY and unchanged vs. the EUR.

For July the dollar has declined against the full list of major currencies with primary losses of -6.52% vs. the NOK, -5.06% vs. the DKK, -4.92% vs. the EUR, -4.67% vs. the NOK, -4.66% vs. the GBP, and -3.54% vs. the AUD.

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Long-term trendline support at 93.500 for the dollar index (DXY) is holding for the second day. Yesterday traded to a low of 93.493 but managed to close at 93.668. Today’s low has been 93.493 where dollar bulls surfaced, lifting the index to 93.834, up 0.18% for the day.

The dollar is mixed vs. the G10 currencies with gains vs. the NZD (+0.52%), SEK (+0.42%), NOK (+0.28%), CAD, DKK, EUR (+0.24%), and AUD (0.07%). The dollar is lower vs. the CHF (-0.27%), JPY (-0.20%), and GBP (-0.03%).

Dollar movement today is likely due to position adjustment ahead of the FOMC’s rate policy announcement tomorrow and not a change in the outlook for the dollar. The daily, weekly, and monthly charts show the dollar under selling pressure with room to move lower.

Global equity indices are a mix of minor gains and losses today, again reflecting a pause ahead of the FOMC headlines tomorrow.

Gold traded to a fresh all-time high earlier today at $1,980.56.

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The dollar index (DXY) has started the week lower, currently down by 0.69%, adding to last week’s drop of 1.57%. The DXY has declined 3.68% during July, ranking this month in the top 10% of monthly declines on record. Long term trendline support at 93.500 (tracing back to 2011) is the next hurdle for dollar bears. A monthly close below 93.500 will bring support at 92.000 into view. Support below that is seen at 88.500.

The dollar’s position as a safe-haven asset is being undermined by the likelihood of additional stimulus (the GOP is introducing a new $1 trillion program today), and the prospect of further Fed action to counter the economic damage of a resurgent COVID-19 infection rate.

The dollar is lower against the G10 currencies except for the CHF where it holds a slim 0.23% gain. Today’s gains vs. the dollar: SEK up 0.89%, EUR and JPY up 0.64%, DKK up 0.62%, NZD up 0.48%, GBP up 0.47%, NOK up 0.46%, AUD up 0.30%, and CAD up 0.15%.

EUR/USD: Now in its 6^th consecutive weekly advance. Next major resistance is at 1.1850 and previous resistance at 1.1450 is now support.

USDCHF dropped to new lows during European trading hours trading as low as .9167 before profit taking came into play and gave the dollar a respite. USDSEK continues its trend lower and has dropped another 1% today and a total of 6.5% during July. USDNOK is down 80bps on the day and down 5.65% during July. USDDKK has also further declined another 78bps today and a total of 5.03% during July. 

Gold is trading at an all-time high today, currently at $1,938.10 after trading as high $1,944.73. The previous record was $1,920.30.

Economic data releases this week include Consumer Confidence due out tomorrow, MBA Mortgage Applications on Wednesday, and Q2 GDP due out on Thursday. The key focus of the week will be on the Fed, as the FOMC begins its two-day meeting tomorrow and will announce rate policy on Wednesday.

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In what is becoming a familiar theme the dollar index is lower today by 0.12%. The DXY is in its 6^th consecutive down day, declining a total 1.84% over that period. It is also worth noting the dollar index is in its 5^th consecutive down week, losing 3.12% during that span. Support near the March 9^th low of 94.650 is offering some support but looks fragile. To find next support we must look back to September of 2018 where it traded to a low of 93.840.

EUR/USD: the euro is higher by another 0.17% today and is set to close out a strong week with a gain of 1.65%. The euro is up 6.02% since April.

USD/JPY: the dollar is lower by 0.88% vs. the JPY as traders continue the shift to save haven assets. The break below short-term support at 106.60 opens the door to a possible test of 105.00 where it last traded in March.

This week’s key gains vs. the USD:

SEK up 1.97%

EUR up 1.65%

DKK up 1.56%

CHF up 1.54%

GBP up 1.50%

AUD up 1.16%

CAD up 1.08%

JPY up 1.01%

NZD up 0.98%

The major equity indices are universally lower today by an average of more than 1%.

Gold is higher by 0.79% and marked another fresh multi-year high today at $1,905.99/oz., now within easy reach of the all-time high of $1,920.30/oz. Gold has gained 5.12% this week and 6.79% during July.

Silver is up 0.34% today, 18.06% for the week, and 25.75% for the month. 

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Weekly initial jobless claims data for the week ending July 17^th was released today at 1,416,000, above the 1,300,000 estimate, and higher than the previous week’s 1,307,000. This is the first uptick in jobless claims since the week ending March 27^th at the peak of the COVID-19 outbreak.

The dollar index is slightly higher today after finding support overnight near yesterday’s low at 94.800.

The tone of today’s markets is ‘risk-off’, marked by a higher dollar and Swiss franc, mixed equities, and lower yields on U.S. treasuries. Rising tensions between the U.S. and China are once again curbing bullish enthusiasm, enticing bulls to scale back positions and lock in profits.

Today’s dollar gains:

+0.46% vs. AUD

+0.41% vs. MXN

+0.32% vs. GBP

+0.30% vs. NZD

+0.10% vs. EUR

AUD/USD: lower today 0.46% but still higher for the week by 1.54% and a comfortable distance above support at 0.7050.

EUR/USD: near-term resistance at 1.1600 (yesterday’s high) and higher by 1.10% for the week.

GBP/USD: the EU and U.K. ended Brexit talks today with the EU’s negotiator stating that ‘big differences’ remain to be resolved before a deal can be reached. The U.K.’s head negotiator echoed a similar sentiment stating that ‘… we must face the possibility that one (an exit deal) will not be reached.’ The GBP is lower by 0.32%. Resistance is seen at 1.2775 and support at 1.2550.

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FX markets saw some movement overnight, extending yesterday’s dollar selloff. The U.S. Dollar Index (DXY) is lower by 0.23% today, adding to yesterday’s 0.75% decline. Channel and trendline support both failed to contain the dollar’s decline. Next support is seen at 94.6500.

The euro is flexing its newfound strength today lifting the EUR/USD to an intraday high above 1.1600, its highest level since October of 2018. A congestion zone between 1.1600 and 1.1800 will be the next hurdle for the euro with momentum favoring a move higher.

AUD/USD: the Aussie dollar is higher today by 0.17% after trading as high as 0.7182 overnight. Resistance is at 0.7200, and higher from 0.7300 to 0.7390.

USD/MXN: the peso is higher today vs. the dollar and the pair is now trading at daily/weekly support near 22.1550.

USD/CAD: lower by 0.15% after trading to an overnight low of 1.3419 and is now down 1.06% for the week. Support at 1.3400 and 1.3350. Significant support at 1.3325.

Precious metals are decisively higher again, with gold up 0.85% at $1858.82/oz and silver up 4.91% at $22.35/oz.

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Risk is back in favor today in the wake of the European Union’s agreement (after four days of negotiations) on a new round of stimulus to counter the economic impact of the coronavirus outbreak. The new ‘recovery fund’ will total 750 billion euro and will be financed by selling bonds, using the EU’s strong credit position to borrow at low interest rates. This is the first time the 27 EU member countries have agreed to shared borrowing, which now exposes citizens of one country to the financial risks of another country, reminiscent of a scene from the hit Broadway play ‘Hamilton’. EU leaders are emphasizing the upside of the shared debt as a sign of EU strength, but millions in the EU’s population will be wondering what was agreed to ‘in the room where it happened’.

Markets are running the risk-on playbook today, selling the USD, CHF, and JPY and buying emerging market and commodity currencies. Today’s primary gains vs. the USD:

BRL up 1.59%

AUD up 1.07%

ZAR up 0.88%

NOK up 0.72%

MXN up 0.70%

NZD up 0.62%

CAD up 0.56%

AUD/USD is having a breakout day, trading as high as 0.71018 and getting a good distance away from prior resistance at 0.7050.

Gold prices are higher by 0.95% and silver is up 4.84%, these two in clear breakout territory now and adding momentum.

Major equity indices are universally higher, and treasuries yields are lower.