The second wave

Today’s news headlines:

‘Second US virus wave emerges as cases top 2 million’. A troubling wave of new infections in parts of America has now pushed the overall number of cases in the country to over two million. In some states, the rate of new cases is outstripping increases in testing, which has raised fears that officials will be unable to control a new outbreak. Perhaps the true test will come in the autumn when the weather changes and back-to-school plans could see another spike in infections. (Bloomberg)

‘Fed predicts no rate increases until at least the end of 2022’. The US central bank struck a dovish tone after yesterday’s meeting announcement, predicting that it will take years to bring joblessness back down to pre-pandemic levels. Fed Chair Jerome Powell also commented that interest rates would most likely stay near to zero until the end of 2022, stating: 'We’re not even thinking about thinking about raising rates'. Meanwhile, Chairman Powell pushed back against concerns that the Fed had artificially propped up markets in a way that could be a source of financial trouble ahead. (Financial Times)

Today's events, rates, and data 

• Risk sentiment soured overnight following concern of a second wave of coronavirus cases in the US and a cautious tone from the Federal Reserve. The safe-haven Dollar bounced against riskier currencies, as did the Japanese Yen – which hit a one-month high. Asian markets fell overnight along with US and European equity futures. Brent Crude slid back towards $40 a barrel while US treasuries gained.

Today's events

RICS House Price Balance: -32% vs -22% previously
Italian Industrial Production: 9.00am
US PPI and Core PPI: 1.30pm
US Weekly Unemployment Claims: 1.30pm
Eurogroup meetings: All day

Interbank rates:

GBP/USD: 1.2655
GBP/EUR: 1.1153
EUR/USD: 1.1348
USD/CAD: 1.3493