On the Macro
It’s a particularly busy week ahead on the economic calendar, with just 73 stats in focus in the week ending 17th July. In the week prior, just 30 stats had been in focus.
For the Dollar:
It’s a particularly busy week ahead on the economic data front plenty of stats for the markets to consider.
June industrial production and July NY Empire State Manufacturing figures are due out on Wednesday.
Expect the numbers to provide direction ahead of June retail sales and July Philly Manufacturing Index numbers on Thursday.
The weekly jobless claims figures will also provide riskier assets with direction on Thursday. Another decline will be needed to support the unbreakable optimism.
At the end of the week, the focus will then shift to prelim consumer sentiment figures for July.
Following the numbers from May and June, this week’s stats will need to continue to impress. Expect any disappointing numbers to also test the market’s optimistic outlook on the economic recovery…
The Dollar Spot Index ended the week down by 0.54% to 96.652.
For the EUR:
It’s a relatively busy week ahead on the economic data front.
In the early part of the week, July’s ZEW economic sentiment figures for Germany and the Eurozone are due out.
Tuesday’s figures will influence ahead of the ECB’s monetary policy decision on Thursday.
Expect the ECB policy decision to have a material influence. The markets will be looking for the promise of more support, if not the delivery of more on the policy front.
Following news earlier in the month of disagreement amongst policymakers, it will be an interesting press conference…
Finalized inflation figures from member states and the Eurozone will likely have a muted impact.
Expect May’s industrial production and trade data for the Eurozone to also be brushed aside…
The EUR/USD ended the week up by 0.46% to $1.1300.
For the Pound:
It’s a particularly busy week ahead on the economic calendar.
On Tuesday, May’s manufacturing and industrial production and 3-month average GDP figures are due out.
Expect the GDP and manufacturing production figures to garner the most interest.
The focus will then shift to employment figures due out on Thursday. June’s claimant counts and May’s unemployment rate will likely have the greatest impact on the Pound.
We don’t expect May trade and June inflation figures due out on Tuesday and Wednesday to have any influence, however.
Away from the calendar, Brexit and COVID-19 will remain key drivers in the week.
The GBP/USD ended the week up by 1.11% to $1.2622.
For the Loonie:
It’s a relatively quiet week ahead on the economic calendar, but an important one.
On the data front, Manufacturing and Wholesale sales figures are due out on Wednesday and Friday.
Don’t expect too much influence from the May numbers, however.
The main event of the week is the Bank of Canada’s monetary policy decision on Wednesday. With the FED having thrown in the kitchen sink, is there anything more?
Crude oil prices have picked up and economic data has delivered a more optimistic outlook on demand.
A pause in the reopening of economies will be of concern, however. There are also rising tensions between the U.S and China to test market resilience.
On the crude oil price front, OPEC’s monthly report will also draw attention on Tuesday…
The Loonie ended the week down by 0.33% to C$1.3592 against the U.S Dollar.
Out of Asia
For the Aussie Dollar:
It’s a relatively quiet week ahead for the Aussie Dollar.
June business confidence and July consumer sentiment figures are due out on Tuesday and Wednesday.
In case the Aussie needed more direction in the week, June employment figures will wrap up the week…
Another slide in employment and expect the Aussie Dollar to come under pressure. COVID-19 news from Australia and beyond will also influence in the week.
The Aussie Dollar ended the week up by 0.16% to $0.6950.
For the Kiwi Dollar:
It’s a quiet week ahead on the economic calendar.
2nd quarter inflation figures are due out on Thursday ahead of June’s business PMI on Friday.
While we would expect inflation figures to influence, the Business PMI should have a greater impact.
Away from the calendar, COVID-19 and geopolitics will provide direction throughout the week.
The Kiwi Dollar ended the week up by 0.66% to $0.6574.
For the Japanese Yen:
It is a quiet week ahead on the economic calendar.
Economic data is limited to finalized industrial production figures for May. Don’t expect the numbers to have any impact on the Yen, however.
COVID-19, Geopolitics, and market sentiment towards the economic outlook remain key.
The Japanese Yen ended the week up by 0.54% to ¥106.93 against the U.S Dollar.
Out of China
It’s a busy week ahead on the economic data front.
Key stats include June trade figures due out on Tuesday and industrial production and fixed asset investment figures on Thursday.
Of greater influence, however, will be 2nd quarter GDP numbers due out on Thursday.
These will be the 1st set of 2nd quarter GDP numbers for the markets to receive from a major economy. So expect plenty of influence.
The Chinese Yuan ended the week up 0.95% to CNY6.9994 against the U.S Dollar.
Following last week’s optimism, news from the week was less so. Brexit will remain the key driver as we move through mid-July. An agreement on fisheries and a blueprint of a trade agreement will need to be in place by the end of the month. A lack of progress on either could test the Pound’s newfound support…
With the number of new COVID-19 cases on the rise across the U.S, Trump may need to take more steps to distract voters.
China is as good a distraction as any, particularly with corporate earnings season kicking off…
Over the weekend, the U.S President ruled out a phase 2 trade agreement…
The EU Recovery Fund
EU member states meet in the week to discuss the Recovery Fund. A failure for member states to agree on focusing on the most adversely affected member states would be a test for the EUR.
The U.S banks are in focus this week, with the markets likely to be particularly interested in forward guidance.
Citigroup, JPMorgan Chase, Wells Fargo deliver on Tuesday, with Goldmans on Wednesday, and Bank of American and Morgan Stanley on Thursday.
We’ve also got the likes of United Health (Wed), Netflix (Thurs), and Delta Air Lines (Tues) rolling out results.
Over the weekend, news of further spikes in new COVID-19 cases will test market risk appetite. Trends throughout the week will need monitoring as will any news of progress towards a vaccine.
Hong Kong closed schools last week, with the Australian government closing the Victoria-NSW border. News from the U.S of some states planning to reverse reopening plans will also be negative for riskier assets…
From the market’s perspective, the 3 key considerations have been:
- Progress is made with COVID-19 treatment drugs and vaccines.
- No spikes in new cases as a result of the easing of lockdown measures.
- Governments continue to progress towards fully opening economies and borders.
For now, the first scenario is the only one that could offset the worst-case scenarios that are now being reported. Both scenarios ii) and iii) are now in question, which would diminish any hope of a sustained economic recovery.
At the time of writing, the total number of coronavirus cases stood at 12,842,112. Monday to Saturday, the total number of new cases increased by 1,306,584. Over the same period in the previous week, the total number had risen by 1,339,869.
Monday through Saturday, the U.S reported 372,491 new cases to take the total to 3,355,646. This was up from the previous week’s 361,375. On Saturday 11th July, there were 70,096 new cases, the highest for the week.
For Germany, Italy, and Spain, there were 6,758 new cases Monday through Saturday. This took the total to 743,627. In the previous week, there had been 6,397 cases over the same period.