Mid-Market Update: Dollar bounces back, ISM impresses, Oil rises, Gold dips, Bitcoin

Global equities continue to grind higher after manufacturing PMI data suggest the economic recovery is staying on course.  Today’s appetite for risk comes alongside a key Capitol Hill impasse over the enhancement unemployment benefits.  A deal is widely expected, but each day that passes is forcing Americans to cut back on spending even further.  If this drags out a couple more weeks, this will put pressure on retailing stocks.  US House Speaker Nancy Pelosi said that Democrats are flexible on the $600/week benefits extension if the unemployment rate declines.  Friday’s employment report will be critical for stimulus expectations.  A bad labor report will likely force Washington DC to finalize the extension of the jobless benefits closer to the $600/week level. 

The White House is exploring options to extend the enhanced benefits if Congress fails, but investors remain skeptical President Trump could do anything alone.


The ISM manufacturing survey showed factory activity is picking up strongly, the highest level since March 2019.  The entire report posted better-than-expected improvements with the headline rising to 54.2 last month, well above the prior 52.6 reading and consensus estimate of 53.6.  The recovery is broad-based as 13 of the 18 manufacturing industries showed improvement.  As many Americans continue to work from home, it comes as no surprise that wood products, furniture and textiles posted the strongest growth.  Home improvements are likely to continue throughout the summer and this Wall Street trade should continue. 

Demand is improving however the rebound in manufacturing will not likely trigger any strong hiring waves. The service part of the US economy is more important and that is likely to remain in contraction territory.


The dollar rebound is likely to be short-lived as an ultra-accomodative Fed for years to come will keep interest rates anchored.  Modest profit-taking sent the dollar higher across the board, in what should be a temporary move.  After testing the 1.19 region, the euro is likely to consolidate before breaking above the 1.20 level.  EU leaders will not be worried about a strong euro anytime soon and we could see this trade continue for the rest of the year. 


Crude prices are rising after a plethora of manufacturing surveys showed the economic recovery continues despite the resurgence of the virus.  Crude remains steady in its range on improving economic data globally, optimism the US hard-hit second wave states are on other side of the virus, and expectations OPEC and friends will hold back from flooding the markets again.  Oil is higher on the day but still strongly trapped in a range.  As OPEC + opens up the taps, the pickup in crude demand has somewhat disappointed and that should keep oil prices grounded for the rest of the summer. 


Gold prices are pulling back as Treasury yields rise and the dollar mounts a modest comeback.  The relentless gold rally is taking a break and seems poised for further consolidation now.  The risks to the outlook remain firmly in place and that will keep the stimulus trade going for gold.  Central banks will eventually face inflation, but for now they will continue to unleash money into the economy. 

Gold’s meteoric rise could see prices pullback towards the $1900 level, before buyers eagerly jump back in.  Nothing has changed for gold’s medium-term outlook and prices should target the $2300 region before year end. 

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023.

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. Prior to OANDA 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, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal.

Ed holds a BA in Economics from Rutgers University.