US Close – No Summer Doldrums here, Haldane’s dissent, Oil higher on Iraq’s cut strategy, Gold softens on strong dollar

Wall Street will not be seeing summer doldrums anytime soon.  Global equities will struggle to improve upon recent gains on a debatable V-shaped economic recovery, rising COVID-19 cases, rebalancing of the S&P and Russell indexes, and a wrath of geopolitical risks, stemming from the US-China trade war, tension amongst the Koreas, and even disputes on the Himalayan border.   

The general picture remains that the economy is heading in the right direction and the labor market is still very bad.  Regional surveys from both the Philly Fed and Empire (Monday)manufacturing painted a positive outlook for the V-shaped recovery to remain intact.  The Leading Index report also posted the strongest recovery after last month’s worst reading ever. Despite a slew of much better-than-expected results from the NFP report, retail sales and the regional surveys, investors will still be skeptical of the economic rebound until continuing claims decline strongly.  The recent spikes across several states across America may also have an impact on the jobless claims data over the next couple of weeks.  US stock prices could stagnate here.

The Dow Jones Industrial Average and S&P 500 index fell, while the Nasdaq remains flavor of this pandemic.  It seems the stay-at-home environment is not leaving us anytime soon and that should keep the Nasdaq nicely supported. 


The British pound initially climbed higher after the BOE boosted its QE program by 100 billion pounds, but noted that the pace of purchases would slow from current levels.  Reducing the pace of buybacks and BOE Chief Economist Haldane’s dissent to keep asset purchase program unchanged forced FX markets to price a lot less support for the UK economy going forward.  The British pounds gains were however short-lived as expectations will grow that the BOE will reverse course and provide more accommodation in the near future if the recovery stalls.   


Oil prices rose after US economic data showed large parts of the economy are bouncing back strongly and after the OPEC+ group’s JMMC meeting saw Iraq and Kazakhstan deliver their strategies for bringing their production down to their quotas.  It seems OPEC+ might actually deliver with their biggest ever production cuts as most of the cheaters seem on board.  Nigeria, Angola, and Congo have yet to deliver reduction plans, but that might not matter if the larger producers seem committed.

WTI crude remains elevated but unlikely to break past $40 level as surging coronavirus cases across Texas, Florida and several other states raise the risk that reopening momentum will hit stall speed very soon.  Beijing seems they may have their second wave of the virus under control, but that does not seem like it will be the case for the US later in the summer or early Fall.  The US still lacks in contact tracing and their isolation practices are questionable.


Gold prices softened after a broad dollar market rally emerged after weekly jobless claims, the best leading indicator for the US economy, came in worse than expected, suggesting the labor market is only gradually improving.  Despite all the other positive economic releases, the recovery will not boost risky assets unless the Americans are quickly coming back to work.  Gold is in a tricky place but will ultimately see further support if the labor situation remains weak.  The stronger dollar theme will likely be short-lived, and gold should eventually make another attempt at $1750 in the short-term. 

The virus situation in the US should also provide steady demand for safe-havens such as Treasuries and gold.  Texas saw hospitalizations rise for a record seventh consecutive day, Florida had its largest increase with new cases, while California had their largest single-day increase with infections. 

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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, 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.