The last week of July may be marked by further observation of the number of COVID-19 cases and waiting for the next fiscal stimulus prepared by American politicians. The season of quarterly results on Wall Street is also underway. We will also get the US Federal Reserve's decision on interest rates with the press conference.
The number of people infected by coronavirus worldwide has already exceeded 15.5 million, of which at least 634 thousand have died. In the U.S., which is now the epicenter of the epidemic, the number of infections has increased by 68.7 thousand in the last 24 hours, while Brazil has recorded 60 thousand new cases and India has set a new record of 49.3 thousand. In terms of fatalities, the U.S. and Brazil have reported more than 1 thousand coronavirus deaths for the second consecutive day. The UK has the third-largest number of deaths worldwide.
Information about the development of the second wave of COVID-19 may be important for investors because of fear of a renewed partial closure of the economy. In turn, any information about a vaccine or effective treatment and therapy could be able to bring back optimism to the markets. It is also worth remembering about the US-China dispute, which already this week led to a deterioration in sentiment on the stock market.
On Thursday, July 30, the US GDP for the second quarter will be published. Since at that time the epidemic was most severely felt economically, a record fall in GDP is expected. Econometric models, including the popular model of the Fed's Atlanta branch – GDPNow, indicate a 35 percent contraction of the economy.
The day before, i.e. on Wednesday, 29 July, the Fed's decision on interest rates will be published together with a press conference. It seems that the Federal Reserve may more dovish as the U.S. economic situation may improve at a slower pace than previously expected. The Bank of America and Wells Fargo believe this could weaken the dollar and have raised their EUR/USD forecast already this week.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
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