Painting an ugly picture

Today’s news headlines:

‘Fed warns resurgence of virus threatens economic recovery’. As expected, the Federal Reserve made no significant changes to monetary policy at the end of its two-day meeting yesterday, leaving interest rates near zero and pledging to do more to support the recovery if needed. Fed Chair Jerome Powell commented that the pace of the recovery looked to have slowed since a spike in new virus cases in June. Powell also sought to downplay the risk of another international shortage of Dollars, as seen early in the pandemic, pledging to extend measures aimed at combatting this eventuality. (Financial Times)

‘US is about to unveil the ugliest GDP report ever recorded’. Clearly, the US was no exception when the global economy ground to a halt in Q2 of 2020, but today we are about to see just how deep that contraction was. US GDP growth is predicted to have plummeted around 35%, annualised, in the second quarter—the largest decline since records began in the 1940s. A collapse in consumer spending accounts for the majority of the expected downturn as Americans stayed home during periods of lockdown. Business spending and investment are also likely to fall a significant amount. (Bloomberg)

Today's events, rates, and data 

• The US Dollar regained some ground overnight as selling pressure into the Fed meeting faded, and signs emerged that the next US fiscal package is nearing an agreement. This coincided with a pullback in gold prices and the Japanese Yen. Global stocks were mixed with Australian and South Korean shares rising and a decline in Japan’s benchmarks. For today, futures are predicting a small gain for European stocks and a little dip for the US S&P 500. 

Today's events

Japanese Retail Sales: -1.2% vs -12.5% previously
German Preliminary GDP: 9.00am
US Advance GDP: 1.30pm
US Weekly Unemployment Claims: 1.30pm

Interbank rates:

GBP/USD: 1.2950
GBP/EUR: 1.1015
EUR/USD: 1.1750
USD/CAD: 1.3387