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Week Ahead – What more can the Fed do?

Key Economic Events

Monday, July 27

– UK and EU Brexit negotiations resume with a focus on fishing rights and level-playing-field regulations.

-The IMF executive board will consider South Africa’s request for a $4.2 billion loan to support its fight against the coronavirus pandemic.

Economic Data:

Tuesday, July 28

 FOMC begins two-day policy meeting

Economic Data:

Wednesday, July 29

– FOMC interest rate decision: Expected to keep rates steady and could reveal plans to provide longer-run accommodation to the U.S. economy.

– EIA crude oil inventory report

Economic Data:

Thursday, July 30

– Earnings Results from Alphabet, Amazon, and Apple

-The European Central Bank publishes its economic bulletin.

Economic Data:

Friday, July 31

Economic Data:

Sovereign Rating Updates:

– Germany(Moody’s),

– Austria (DBRS)

– Ireland (DBRS)



The risks to outlook have grown and the Fed may be ready to do more.  After an unexpected rise in jobless claims and as US coronavirus cases continue to spread across the Sunbelt, concerns are growing that the economic recovery is stalling.  The Fed may signal their emergency programs are not going away anytime soon and announce a new maturity composition of Treasury purchases.  Interest rates will remain near zero for a few years and the Fed may need to signal their actions will also keep long-term yields grounded.

US Politics

Congress attempts to deliver another COVID-19 relief bill.  Republicans have been slow to announce their proposal and that could prove costly as the $600-a-week federal aid expires in less than a week. Senate Majority Leader Mitch McConnell will release his plan on Monday.

Democrats are eagerly awaiting former-VP Biden’s decision on his running mate.  Prior to COVID-19, the Democratic National Convention was originally scheduled in July, meaning we should have found out his decision by June.  Since the convention was delayed till August 17th, he will have more time to evaluate his candidates.  Biden will turn 78 a few weeks after the election, so his VP selection will be critical for many voters.


EU passes pandemic recovery package. Euro and European stocks set to outperform next week. Euro is also receiving haven flows as confidence in US Dollar ebbs. Slow event and week ahead of summer holidays. German IFO the highlight.


EU Michael Barnier saying the Brexit agreement looks remote. Appears to be capping GBP/USD below 1.2700 even as the Dollar weakens. Expected to weaken vs Euro. UK strong anti-China stance is increasing the risk of China economic retaliation. UK negative.

No data of note.


Russian ruble stabilizes as oil prices edge higher.  No significant data.

South Africa

Covid-19 cases continue spiking, casting a cloud over the economic outlook. Curbs on alcohol sales and lockdowns reinstated. General EM rally sees ZAR at high end of the two-month range, but further gains are challenging.

No significant data.


China Industrial Profits on Monday, and PMI’s on Friday bookend the week. Large divergence from market forecasts will be market moving.

All attention on worsening relations with the US. Tit for tat consulate closures and escalating rhetoric. China equities are wobbling. Unlikely to see rhetoric spilling over into outright trade war at this stage. Headline driven market.

Hong Kong

Covid-19 comeback results in stricter restrictions in HK, threatening economic recovery. Still weighed down by new China security law but this is an evolving situation. HKD weakens to the other side of peg but no chance it breaks, or the US undermines it.

Equity markets supported by impending Ant Financial dual listing. Headline driven market, GDP Wednesday main focus. Recovery to -0.50% from -5.50%. Downside miss renews pressure on HK equities.


Covid-19 cases continue skyrocketing. India is now in top 4 for infections. INR remains under pressure as stress on the government budget and banking sector continue. Very real possibility that India will repeat Indonesia’s recent playbook and get the central bank to directly purchase new government bond issues. Negative currency and stocks.

Highest risk economy in Asia from an economic and Covid-19 perspective.

No significant data.


Australian Dollar breaks range and rallies, looks set for more gains next week, geopolitics aside.

China relations continue to deteriorate a major risk factor. Announced an 185 billion budget deficit for next year, but ratings agencies affirmed AAA credit rating. Australian markets positive. Data shows recovery on course despite Victoria lockdown.

Australian Inflation Wednesday expected to fall. Will spur more easing calls, stocks positive.


USD/JPY range trading. Equity markets holding near highs. Japan retail sales expected to fall again on Thursday.

Covid-19 cases are spiking higher in Tokyo but the government is refusing to declare an emergency, causing disquiet amongst domestic investors.

After a two-day holiday USD/JPY to remain range bound next week. Eyes are elsewhere.



Crude prices are rising after impressive European PMI data suggests crude demand should improve as the region moves back into expansion territory.  Oil is also getting a boost as supply disruptions seem likely as the Atlantic hurricane season heats up.  Tropical Storm Hanna is strengthening off Texas and tropical storm Gonzalo is brewing in the Caribbean.

WTI crude’s tight range is likely ending now as the latest move in Treasuries could spark a broader move across all asset classes.  The risks seem to be growing to the downside for crude and any rallies that do not stem from any major production outages could be short-lived.


Gold still has its eyes set on record highs as central banks will accept the call for more action.  Gold prices are taking a breather following impressive European PMIs and as investors focus on the upcoming Fed policy meeting next week.  The Fed could be the catalysts next week to help gold clear the $1900/oz level.  If policymakers unveil plans to deliver longer-run support to the economy as growth stalls.

Geopolitical tensions continue to percolate and that is also providing another layer of support for higher gold prices.  Relations between the world’s two largest economies won’t head towards a messy divorce, but they can get a lot worse from here.

Gold volatility will remain high as it seems a major correction could be in the cards once it reaches record high territory.


Bitcoin got a boost after the Office of the Comptroller of the Currency (OCC) noted that national banks have authority to provide fiat bank accounts and cryptocurrency custodial services to cryptocurrency custodial services.  Bitcoin’s progress into the banking system is gaining steam and this should be positive for the entire crypto space.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya [4]

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya
Ed Moya

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