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Geopolitics and COVID-19 Put the EUR, Pound and the Greenback in Focus

Earlier in the Day:

It was a relatively busy start to the day on the economic calendar. The Japanese Yen and the PBoC were in action in the early part of the day.

Away from the economic calendar, riskier assets continued to struggle as COVID-19 and geopolitical risks weighed.

Looking at the latest coronavirus numbers

On Sunday, the number of new coronavirus cases rose by 219,728 to 14,641,819, according to figures at the time of writing. On Saturday, the number of new cases had risen by 232,868. The daily increase was lower than Saturday’s rise while up from 194,475 new cases from the previous Sunday.

Germany, Italy, and Spain reported 491 new cases on Sunday, which was up from 476 new cases on Saturday. On the previous Sunday, just 372 new cases had been reported.

From the U.S, the total number of cases rose by 65,279 to 3,898,550 on Sunday. On Saturday, the total number of cases had increased by 63,259. On Sunday, 19th July, a total of 58,349 new cases had been reported.

For the Japanese Yen

Japan’s trade deficit narrowed from ¥838.2bn to ¥268.8bn in June. Economists had forecast a narrowing to ¥35.8bn.

According to figures released by the  Ministry of Finance,

  • Exports tumbled by a further 26.2% in June, following on from a 28.3% slump in May. Economists had forecast a 24.9% fall.
    • Exports to Asia fell by 15.3%, to Western Europe by 30.0%, and by 46.6% to the U.S.
    • Japan’s exports to China fell by a modest 0.2% when compared with June 2019.
  • Imports slid by 14.4% in June, following a 26.2% slump in May. Economists had forecast a 16.8% slide.
    • Imports from HK tumbled by 77.5%, by 12.6% from the U.S, by 22% from Australia, and by 10.9% from Western Europe.

The Japanese Yen moved from ¥107.067 to ¥107.092 upon release of the minutes and stats. At the time of writing, the Japanese Yen was down by 0.33% to ¥107.37 against the U.S Dollar.

Out of China

The PBoC left the 5-year loan prime rate unchanged at 4.65%, with the 3-year left unchanged at 3.85%. The hold was in line with market expectations and the PBoC’s recent forward guidance.

Some may have hoped for further support following the disappointing June retail sales figures for last week. Ultimately, the economic rebound in the 2nd quarter was good enough to allow the PBoC to leave rates unchanged.

The Aussie Dollar moved from $0.69824 to $0.69776 upon the announcement. At the time of writing, the Aussie Dollar was down by 0.20% to $0.6982.

Elsewhere

At the time of writing, the Kiwi Dollar was down by 0.17% to $0.6546.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. Key stats include June wholesale inflation figures for Germany.

The stats are unlikely to have an impact on the EUR, however, as the markets look for updates from Brussels. EU Recovery Fund talks extended into the weekend but failed to result in an agreement. The EUR will likely come under pressure if progress is not made today.

At the time of writing, the EUR was down by 0.08% to $1.1419.

For the Pound

It’s a particularly quiet day ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

A lack of stats will leave the Pound in the hands of Brexit and market risk sentiment on the day. There was nothing positive from the weekend, on the Brexit front, to provide the Pound with support.

At the time of writing, the Pound was down by 0.34% to $1.2525.

Across the Pond

It’s also a particularly quiet day ahead for the U.S Dollar. There are no material stats due out to provide the Greenback with direction.

A lack of stats will leave the Dollar in the hands of updates on COVID-19 and chatter from Washington.

At the time of writing, the Dollar Spot Index was up by 0.22% to 96.152.

For the Loonie

It’s a quiet day ahead on the economic calendar. There are no material stats due out, which will leave the Loonie in the hands of market risk sentiment on the day.

COVID-19 and U.S-China tensions will be the key areas of focus.

At the time of writing, the Loonie was down by 0.04% to C$1.3586 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.