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Dollar Tumbles Further as Gold Hits Record, Coronavirus Weighs on Sentiments

Gold’s up trend accelerates further and finally makes new record high today. That comes in a time when there are increasing evidence of second wave of coronavirus infections globally. Also, US-China relations deteriorate to a new low for decades. Dollar is extending recent selloff and is trading and the worst performing one for today so far, followed by Canadian. Yen is the strongest, followed by New Zealand Dollar and then Euro. The greenback looks rather vulnerable and it’s unlikely to be saved by Fed later in the week.

Technically, a focus would be on whether Euro could maintain last week’s strong upside momentum, or it would finally be overwhelmed by risk aversion. For now, further rise is still in favor in EUR/JPY and break of 124.43 will resume whole rebound from 114.42. But a break of 121.96 support will indicate rejection by 124.43 and bring deeper fall to extend a short term consolidation pattern, towards 119.31/120.27 support zone. Further rise is also in favor in EUR/CHF with 1.0701 minor support intact. Break of 1.0797 should at least target a test on 1.0915 short term top. But break of 1.0701 would bring a test on 1.0602 support instead.

In Asia, currently, Nikkei is down -0.24%. Hong Kong HSI is down -0.36%. China Shanghai SSE is down -0.36%. Singapore Strait Times is down -0.25%. Japan 10-year JGB yield is up 0.0046 at 0.021.

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Gold accelerates to new record high, next key target at 2020

Gold’s uptrend accelerates further as another week starts and hits new record high at 1944.349. Prior record of 1920.70 made in 2011 is now taken out. From near term point of view, next target will be 100% projection of 1451.16 to 1747.75 from 1670.66 at 1967.25 next. On the downside, break of 1887.16 minor support will bring some consolidations first.

Though, the real test will be on medium term target of 261.8% projection of 1046.37 to 1375.17 from 1160.17 at 2020.96.

BoJ: Economy unlikely to reach pre-pandemic level even in fiscal 2022

Summary of Opinions of BoJ’s July 14-15 meeting reiterated that the economy is “likely to improve gradually” from H2, but the pace is expected to be “only moderate” as coronavirus impact remains. The economy is “unlikely” to return to pre-pandemic level “even in fiscal 2022”, since it will take time for a “structural change” to overcome the pandemic impacts.

Also, the economic shock of COVID-19 seems to be “largely attributable to a negative demand shock”. There are signs that a decline in short-term inflation expectations is affecting medium- to long-term ones. “Downward pressure will likely be exerted on prices for the time being”.

One opinion noted that it’s appropriate to ” revise the forward guidance to make it a more powerful one that does not allow deflation to take hold and leads to additional easing measures under the concrete conditions related to prices.” One said BoJ should examine the ” tr