USD: Data to play a secondary role - ING

Strategists at ING note that US politics remains center stage ahead of the Republican National Convention. Investors are also keeping a close eye on the course and strength of two hurricanes set to hit the Gulf of Mexico.

"The new week has started with range-bound moves in the G10 despite Asian equities having set an optimistic tone in early trading. US politics remains center stage. Along with any developments in the US relief package talks, two threads will be closely monitored from an election perspective: (a) the $25 billion of funding to the US Postal service voted by the House, which should however be voted down by the Senate; (b) President Trump’s reported interest to fast-track the approval of Covid-19 vaccines, and the FDA having granted an emergency authorisation for blood plasma treatment."

"Developments in the first thread may impact the perceived chances of a contested result in November, while the latter is seen as a way for Trump to regain some consensus."

"Meanwhile, investors will keep a close eye on the course and the strength of two hurricanes set to hit the US Gulf of Mexico. Sixty percent of oil production in the region has already been shut, but oil has yet to benefit from the expected supply shock as rising Covid-19 contagion worldwide (and especially in Europe), are playing as a strong counter-factor for now.'

"Finally, concerns around geopolitical turmoil are being fuelled by more demonstrations in Belarus, as markets weigh the risk of direct intervention by Russia. Amid such an abundance of potentially market-moving events, data will play second-fiddle today, with the calendar looking quiet in the G10 space."

"Moving ahead in the week, risk-sentiment will depend on the ability of policymakers to keep the recovery hopes alive, and will culminate with the Jackson Hole Symposium starting on Thursday."