COVID-19 Drives Demand for the Dollar, with Very Little Else to Distract the Markets

Earlier in the Day:

It was another relatively quiet start to the day on the economic calendar. The Kiwi Dollar was in focus in the early part of the day.

Away from the economic calendar COVID-19 continued to be a major source of angst for the markets, as new cases surged in the U.S.

Looking at the latest coronavirus numbers

On Thursday, the number of new coronavirus cases rose by 223,514 to 12,386,140. On Wednesday, the number of new cases had risen by 222,368. The daily increase was higher than Wednesday’s rise while higher than 190,716 new cases from the previous Thursday.

Germany, Italy, and Spain reported 1,190 new cases on Thursday, which was up from 986 new cases on Wednesday. On the previous Thursday, 1,027 new cases had been reported.

From the U.S, the total number of cases rose by 61,067 to 3,219,999 on Thursday. On Wednesday, the total number of cases had increased by 62,416. On Thursday, 2nd July, a total of 48,853 new cases had been reported.

For the Kiwi Dollar

Electronic card retail sales increased by 16.3% in June, following a 78.9% jump in May.

According to NZ Stats,

By Industry, the movements were:

  • Durables, up NZ$310m (24%), with consumables up NZ$205m (11%).
  • Motor vehicles (excl. fuel) rose NZ$45m (26%), while spending on fuel fell NZ$84m (15%).
  • Spending on apparel rose NZ18m (5.7%), while spending on hospitality fell NZ$74m (7.3%).

In more detail:

  • Monthly spending on medical and other health care services reached a record high in Jun-20. Spending jumped by 20% from Jun-19.
  • Spending at restaurants, cafes, and takeaway was nearly back to pre-COVID-19 levels, while down by 2.4% on Jun-19.
  • Pent up demand led to a further rise in spending on long-lasting goods. Furniture, electrical, and hardware retailing was up by 27% from Jun-19.

The Kiwi Dollar moved from $0.65703 to $0.65691 upon release of the numbers. At the time of writing, the Kiwi Dollar down by 0.26% to $0.6553.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.11% to ¥107.08 against the U.S Dollar, while the Aussie Dollar was down by 0.27% to $0.6945.

The Day Ahead:

For the EUR

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

A lack of stats leaves the EUR in the hands of market risk appetite on the day. With the ECB in action next week, COVID-19 and geopolitics will be key drivers early on in the day.

At the time of writing, the EUR was down by 0.06% to $1.1278.

For the Pound

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

A lack of stats leaves the Pound in the hands of Brexit and market risk sentiment.

At the time of writing, the Pound was down by 10% to $1.2593.

Across the Pond

It’s also a relatively busy day ahead for the U.S Dollar. Later today, wholesale inflation figures for June are due out later today.

Barring particularly dire numbers, however, the stats should have a muted impact on the Dollar and risk sentiment.

Expect any chatter from Washington and COVID-19 updates to remain in focus.

At the time of writing, the Dollar Spot Index was up by 0.16% to 96.850.

For the Loonie

It’s a relatively busy day ahead on the calendar. June’s employment figures are due out later today. Expect the numbers to have a material impact on the Loonie, with the BoC in action next week.

Away from the economic calendar, sentiment towards the economic outlook and demand for crude will also provide direction. The IEA’s monthly report will draw attention today amidst the risk-off sentiment.

At the time of writing, the Loonie was down by 0.06% to C$1.3594 against the U.S Dollar.

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

Brexit, COVID-19, and U.S Weekly Jobless Claims in the Spotlight

Earlier in the Day:

It was a relatively quiet start to the day on the economic calendar. The Pound and the Aussie Dollar, by proxy, were in focus in the early part of the day.

Away from the economic calendar COVID-19 and geopolitics continued to be a major source of angst for the markets.

Looking at the latest coronavirus numbers

On Wednesday, the number of new coronavirus cases rose by 222,368 to 12,130,571. On Tuesday, the number of new cases had risen by 227,176. The daily increase was lower than Tuesday’s rise while higher than 210,499 new cases from the previous Wednesday.

Germany, Italy, and Spain reported 986 new cases on Wednesday, which was up from 776 new cases on Tuesday. On the previous Wednesday, 1,062 new cases had been reported.

From the U.S, the total number of cases rose by 62,416 to 3,162,416 on Wednesday. On Tuesday, the total number of cases had increased by 67,655. On Wednesday, 1st July, a total of 51,607 new cases had been reported.

Out of China

June’s inflation figures were in focus this morning. China’s annual rate of inflation picked up from 2.40% to 2.5%. Economists had forecast an annual rate of inflation of 2.50%. Month-on-month, consumer prices fell by 0.1%, following a 0.8% decline in May. Economists had forecast a 0.5% decline.

Wholesale deflationary pressures eased marginally in June, with the producer price index falling by 3% year-on-year. In May, the index had fallen by 3.7%. Economists had forecast a 3.2% decline

At the time of writing, the Aussie Dollar was down by 0.07% to $0.6977.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.07% to ¥107.34 against the U.S Dollar, with the Kiwi Dollar down by 0.09% to $0.6569.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. Germany’s trade data for May will be in focus later this morning.

Barring a further narrowing in the trade surplus, however, the data should have a relatively muted impact on the EUR.

Expect updates from Brexit talks, COVID-19 and geopolitics to be the key drivers on the day.

At the time of writing, the EUR was up by 0.04% to $1.1334.

For the Pound

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

A lack of stats leaves the Pound in the hands of Brexit as talks resumed on Wednesday. Any agreement on EU access to Britain’s fisheries and expect the Pound to jump.

Earlier in the day, June’s RICS House Price Balance figures had a muted impact on the Pound. The RICS House Price Balance survey showed that a net balance of -15% of respondents saw some degree of house price decline over the survey period. This was an improvement from a net -32% of respondents in May. Economists had forecast a net balance of -25%.

At the time of writing, the Pound was flat at $1.2610.

Across the Pond

It’s also a quiet day ahead for the U.S Dollar. Later today, the weekly jobless claims figures will draw plenty of attention. While nonfarm payrolls have impressed, the weekly claims numbers continue to raise red flags…

Another sizeable jump and the markets may need to question the upbeat sentiment towards the labor market recovery.

Away from the economic calendar, expect COVID-19 news and any chatter from Washington to also influence on the day.

At the time of writing, the Dollar Spot Index was up by 0.07% to 96.493.

For the Loonie

It’s another quiet day ahead on the calendar. May building permit figures are due out of Canada later today.

We don’t expect too much influence from the numbers, however.

Risk sentiment will remain the key driver as the markets begin to consider the Bank of Canada’s monetary policy decision next week.

At the time of writing, the Loonie was down by 0.04% to C$1.3517 against the U.S Dollar.

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

A Quiet Economic Calendar Leaves COVID-19 to Test the Risk Appetite

Earlier in the Day:

It was a particularly quiet start to the day on the economic calendar. Japan’s current account figures for May were all that the markets had to consider from the calendar.

Away from the economic calendar risk-off sentiment through the European and U.S session tested the majors early on.

COVID-19 remains a key risk as the number of new cases continues to rise amidst efforts to reopen economies.

Looking at the latest coronavirus numbers

On Tuesday, the number of new coronavirus cases rose by 227,176 to 11,940,258. On Monday, the number of new cases had risen by 177,554. The daily increase was higher than Monday’s rise and 201,507 new cases from the previous Tuesday.

Germany, Italy, and Spain reported 776 new cases on Tuesday, which was down from 1,876 new cases on Monday. On the previous Tuesday, 934 new cases had been reported.

From the U.S, the total number of cases rose by 67,655 to 3,096,516 on Tuesday. On Monday, the total number of cases had increased by 45,706. On Tuesday, 30th June, a total of 53,471 new cases had been reported.

For the Japanese Yen

Japan’s current account surplus rose from ¥0.263tn to ¥1.177tn in May. Economists had forecast surplus of ¥1.088tn.

The Japanese Yen moved from ¥107.561 to ¥107.643 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.14% to ¥107.67 against the U.S Dollar.

Elsewhere

At the time of writing, the Aussie Dollar was down by 0.16% to $0.6936, with the Kiwi Dollar down by 0.06% to $0.6542.

The Day Ahead:

For the EUR

It’s a quiet day ahead on the economic calendar, with no material stats due out of the Eurozone to provide direction.

Geopolitics and market sentiment towards the recent spike in new COVID-19 cases will leave the EUR exposed to any risk aversion.

At the time of writing, the EUR was up by 0.01% to $1.1275.

For the Pound

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

With Brexit negotiations in focus this week, expect plenty of updates that could rock the Pound. Risk sentiment may have a greater influence, however, as the Pound builds resilience against the Brexit chatter…

At the time of writing, the Pound was up by 0.06% to $1.2550.

Across the Pond

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

That leaves COVID—19 and geopolitics in focus on the day, which tends to be a bad thing for riskier assets…

At the time of writing, the Dollar Spot Index was up by 0.09% to 96.966.

For the Loonie

It’s also a quiet day ahead on the calendar. With no material stats due out, the Loonie will be in the hands of the weekly crude oil inventory numbers and risk sentiment.

At the time of writing, the Loonie was down by 0.01% to C$1.3605 against the U.S Dollar.

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

Economic Data and Optimism Continues to Weigh on the Greenback. Next up, the RBA…

Earlier in the Day:

It was a busier start to the day on the economic calendar. The Kiwi Dollar and Japanese Yen were in action early this morning. Later this morning, the RBA and Aussie Dollar are also in the spotlight.

Away from the morning stats, the markets responded to U.S ISM Non-manufacturing PMI numbers from Monday.

Continued optimism over an economic recovery amidst spiking new COVID-19 cases weighed on the Greenback.

COVID-19 numbers continued to hit concerning levels, though the markets remained focus on the economic recovery and not news of renewed lockdown measures across the globe.

Looking at the latest coronavirus numbers

On Monday, the number of new coronavirus cases rose by 177,554 to 11,713,082. On Sunday, the number of new cases had risen by 156,610. The daily increase was higher than Sunday’s rise and 153,341 new cases from the previous Monday.

Germany, Italy, and Spain reported 1,876 new cases on Monday, which was up from 407 new cases on Sunday. On the previous Monday, 803 new cases had been reported. Notably, Spain reported 1,244 new cases on Monday. This was the highest since 22nd May and follows news of a lockdown within the Catalonia region.

From the U.S, the total number of cases rose by 45,706 to 3,028,861 on Monday. On Sunday, the total number of cases had increased by 47,385. On Monday, 29th June, a total of 41,940 new cases had been reported.

For the Kiwi Dollar

The NZIER Quarterly Survey of Business Survey (QSBO) showed that a net 63% of businesses expect a deterioration in general economic conditions in the 2nd quarter. In the 1st quarter, a net 67% of businesses had expected a deterioration.

  • A net 37% of businesses reported a decline in own trading activity, which was the lowest since Mar-09.
  • While this was expected as a result of lockdown measures, a net 25% of businesses also expect weaker demand in the next quarter.
  • The negative sentiment towards the quarter ahead was attributed to pre-general election uncertainty and over COVID-19.
  • News of countries reporting fresh spikes added to uncertainty over how the COVID-19 pandemic would play out.

The Kiwi Dollar moved from $ to $ upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.14% to $0.6564.

For the Japanese Yen

Household spending fell by 0.1% in May, month-on-month, partially reversing a 6.2% decline from April. Economists had forecast a 1.8% increase. Year-on-year, household spending was down by 16.2%, following an 11.1% slide in April. Economists had forecast a 12.2% tumble.

According to the Statistic Bureau,

  • Spending on clothing & footwear (-37.4%), culture & recreation (-37.2%), education (-29.2%), and housing (-24.2%) weighed heavily.
  • There were also sizeable declines in spending on fuel, light, & water charges (-8.0%), medical care (-6.5%), and food (-3.4%).
  • Spending on furniture and household utensils rose by 8.0%, year-on-year, to buck the trend.

The Japanese Yen moved from ¥107.357 to ¥107.356 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.04% to ¥107.31 against the U.S Dollar.

For the Aussie Dollar

At the time of writing, the Aussie Dollar was up by 0.06% to $0.6977, with the markets expecting an RBA hold on policy.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. Key stats include German industrial production figures for May.

Following June’s PMI numbers, there will need to be a pickup in production to support the survey-based data.

Away from the economic calendar, however, expect market risk sentiment to remain the key driver. While news from China was positive on Monday, geopolitics and COVID-19 remain key risks to the current sentiment.

At the time of writing, the EUR was up by 0.10% to $1.1320.

For the Pound

It’s a quiet day ahead on the economic calendar. Housing sector figures for June and 1st quarter labor productivity numbers are due out.

Following news at the start of the week of plans to raise the threshold for stamp duty, June house price figures should have a muted impact. We can also expect 1st quarter labor productivity numbers to also be brushed aside by the Pound.

Expect market risk sentiment, COVID-19, and Brexit chatter to remain key drivers.

At the time of writing, the Pound was up by 0.10% to $1.2505.

Across the Pond

It’s a relatively quiet day ahead for the U.S Dollar. Key stats include May’s JOLTs job openings. Expect the markets to be sensitive to today’s figures. While nonfarm payrolls have impressed, the weekly jobless claims continue to raise red flags…

Away from the numbers, chatter from the U.S administration and the latest COVID-19 numbers will also draw attention.

At the time of writing, the Dollar Spot Index was down by 0.05% to 96.676.

For the Loonie

It’s a relatively quiet day ahead on the calendar. June’s Ivey PMI is due out later today.

There will be some influence on the Loonie, though geopolitics and COVID-19 will likely be key drivers.

At the time of writing, the Loonie was down by 0.01% to C$1.3541 against the U.S Dollar.

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

U.S Service Sector PMIs, Geopolitics, and COVID-19 Put the Dollar in Focus

Earlier in the Day:

It was a particularly quiet start to the week on the economic calendar. There were no material stats for the markets to consider through the early part of the Asian session.

A lack of stats left the markets to consider the latest COVID-19 numbers and updates from the weekend and the rising tension between the U.S and China.

Looking at the latest coronavirus numbers

On Sunday, the number of new coronavirus cases rose by 156,610 to 11,535,528. On Saturday, the number of new cases had risen by 393,825. The daily increase was lower than Saturday’s rise while up from 136,417 new cases from the previous Sunday.

Germany, Italy, and Spain reported 322 new cases on Sunday, which was down from 1,612 new cases on Saturday. On the previous Sunday, just 650 new cases had been reported.

From the U.S, the total number of cases rose by 40,401 to 2,976,171 on Sunday. On Saturday, the total number of cases had surged by 107,457. On Sunday, 28th June, a total of 35,905 new cases had been reported.

The Majors

At the time of writing, the Japanese Yen was down by 0.22% to ¥107.75 against the U.S Dollar. The Aussie Dollar was up by 0.29% to $0.6959, with the Kiwi Dollar up by 0.34% at $0.6553.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. From Germany, May’s factory orders are due out, with May retail sales and June’s Construction PMI due from Germany.

While we would expect Germany’s factory orders to provide direction, risk sentiment will likely be the key driver.

Concerns over the spike in new COVID-19 cases in the U.S could weigh on risk sentiment later in the day. Much will depend on the news wires.

At the time of writing, the EUR was up by 0.20% to $1.1270.

For the Pound

It’s a quiet day ahead on the economic calendar. June’s Construction PMI is due out later this morning.

Any influence on the Pound will likely be short-lived, however, with the Pound likely to be in the hands of Brexit.

Updates from the weekend suggested that the chances of a no-deal departure from the EU had risen sharply.

Risk sentiment will also influence. The risk-on sentiment limited the downside for the Pound early on.

At the time of writing, the Pound was down by 0.01% to $1.2482.

Across the Pond

It’s a relatively busy day ahead for the U.S Dollar. Key stats include the market’s preferred ISM Manufacturing PMI for June and the finalized Markit survey services PMI.

Expect the ISM figures to have the greatest impact on the day.  The markets will be expecting some impressive numbers…

We can expect plenty of chatter from the U.S administration, who has moved into damage control.

At the time of writing, the Dollar Spot Index was down by 0.12% to 97.051.

For the Loonie

It’s a quiet day ahead on the calendar. There are no material stats due out of Canada to provide the Loonie with direction.

While there are no stats, the BoC will release the Business Outlook Survey later in the day. Expect the results of the survey to provide the Loonie with direction upon release.

Over the course of the day, any threat of a wider pause on the easing of lockdown measures would weigh on the Loonie. There is also the rising tension between the U.S and China to also consider. It’s no longer just a trade war that the markets may be in fear of.

At the time of writing, the Loonie was down by 0.01% to C$1.3548 against the U.S Dollar.

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

With the U.S Markets Closed, Service PMIs Put the EUR in the Spotlight

Earlier in the Day:

It was a busier start to the day on the economic calendar on Friday. The Aussie Dollar and Japanese Yen were in action early in the day. There were also stats from China for the markets to consider.

Away from the morning stats, the markets responded to economic data from the U.S on Thursday and COVID-19 news.

Looking at the latest coronavirus numbers

On Thursday, the number of new coronavirus cases rose by 190,716 to 10,985,093. On Wednesday, the number of new cases had risen by 210,499. The daily increase was lower than Wednesday’s rise and down from 235,258 new cases from the previous Thursday.

Germany, Italy, and Spain reported 1,027 new cases on Thursday, which was down from 1,062 new cases on Wednesday. On the previous Thursday, 1,286 new cases had been reported.

From the U.S, the total number of cases rose by 48,853 to 2,828,313 on Thursday. On Wednesday, the total number of cases had risen by 51,607. On Thursday, 25th June, a total of 45,503 new cases had been reported.

For the Japanese Yen

The June Services PMI came in at 45.0 according to finalized figures, which was up from a prelim 42.3. In May, the PMI had stood at 26.5.

According to the finalized Survey,

  • An end to the state of emergency delivered much-needed support as the PMI hit a 4-month high.
  • Levels of activity and new orders saw a faster pace of decline, however, attributed to the impact of COVID-19 on the economy.
  • Employment levels declined only marginally, with 88% of firms reporting no change to employment levels.
  • Confidence improved to a 4-month high in spite of firms seeing challenges ahead.

The Japanese Yen moved from ¥107.472 to ¥107.541 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.04% to ¥107.54 against the U.S Dollar

For the Aussie Dollar

May’s retail sales figures were in focus early on. According to the ABS, retail sales jumped by 16.9%, reversing most of a 17.7% slide from April. Economists had forecast a 16.3% rise.

  • Clothing, footwear, and personal accessory retailing jumped by 129.2%.
  • Cafes, restaurants, and takeaway food services reported a jump of 30.3%
  • Food retailing increased by 7.2%, with household goods retailing up by 16.6%.
  • Department store retailing rose by 44.4%.

The Aussie Dollar moved from $0.69262 to $0.69206 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.01% to $0.6925.

Out of China

China’s Caixin Services PMI rose from 55.0 to 58.4 in June. The composite increased from 53.4 to XX, supported by an uptick in activity across both manufacturing and services.

According to the June Services Survey,

  • Business activity and new orders rose at a sharper pace in June, with the rate of expansion the quickest since 2010.
  • New business also rose at the sharpest pace since 2010, while workforce numbers continued to decline.
  • The modest decline in the workforce was attributed to voluntary leavers.
  • Optimism across services sector firms hit a 3-year high, attributed to strong demand.

The Aussie Dollar moved from $0.69229 to $0.69237 upon release of the figures

Elsewhere

At the time of writing, the Kiwi Dollar was up by 0.09% at $0.6517.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar. June Service PMI numbers are due out of Italy and Spain, with finalized PMIs due out of France, Germany, and the Eurozone.

Expect the Eurozone’s Services and Composite PMIs to have the greatest influence on the day.

With the U.S markets closed in recognition of Independence Day, expect volumes to be on the lighter side.

Any chatter on the EU’s Recovery Fund and Brexit will also be an influence on the day.

At the time of writing, the EUR was up by 0.05% to $1.1245.

For the Pound

It’s a quiet day ahead on the economic calendar. June’s finalized services and composite PMIs are due out later this morning.

Barring any deviation from prelims, the stats are unlikely to have a material impact on the Pound.

Brexit and COVID-19 will remain the key drivers on the day.

At the time of writing, the Pound was down by 0.01% to $1.2467.

Across the Pond

The U.S markets are closed in recognition of Independence Day. That leaves the Greenback in the hands of market risk appetite on the day.

At the time of writing, the Dollar Spot Index was down by 0.12% to 97.199.

For the Loonie

It’s a quiet day ahead on the calendar. There are no material stats due out of Canada to provide the Loonie with direction.

With the U.S markets closed, expect volumes to be on the lighter side. Market risk sentiment will influence on the day, however.

At the time of writing, the Loonie was flat at C$1.3564 against the U.S Dollar.

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

Nonfarm Payrolls to Put the Dollar in Focus as COVID-19 Angst Eases

Earlier in the Day:

It was a quieter start to the day on the economic calendar on Thursday. The Aussie Dollar was in action early in the day.

Away from the economic calendar, the markets responded to the positive news of progress towards a COVID-19 vaccine. The news comes as the latest COVID-19 numbers revealed yet another spike on Wednesday.

Positive economic data from the EU and the U.S from Wednesday also supported riskier assets early on. The stats continued to support a speedier economic recovery.

Looking at the latest coronavirus numbers

On Wednesday, the number of new coronavirus cases rose by 210,499 to 10,794,377. On Tuesday, the number of new cases had risen by 201,507. The daily increase was higher than Tuesday’s rise and up from 174,860 new cases from the previous Wednesday.

Germany, Italy, and Spain reported 1,062 new cases on Wednesday, which was up from 934 new cases on Tuesday. On the previous Wednesday, 1,463 new cases had been reported.

From the U.S, the total number of cases rose by 51,607 to 2,779,460 on Wednesday. On Tuesday, the total number of cases had risen by 53,471. On Wednesday, 24th June, a total of 38,253 new cases had been reported.

For the Aussie Dollar

Australia’s trade surplus narrowed from A$8.8bn to A$8.025bn in May.

According to the ABS,

  • Goods and services credit fell by A$1,604m (4%) to A$35,742m.
    • Non-rural goods fell A$1,080m (4%), rural goods fell A$404m (10%), and non-monetary gold fell A$219m (12%).
    • Net exports of goods under merchanting remained steady a A$45m, with services credits rising A$99m (2%).
  • Goods and services debits fell A$1,799m (6%) to A$27,717m.
    • Consumption goods fell A$1,2333m (14%), intermediate and other merchandise goods fell A$821m (8%), and capital goods fell A$412m (7%).
    • Non-monetary gold imports rose by A$710m (113%), while services debits fell $43m (1%).

The Aussie Dollar moved from $0.69245 to $0.69242 upon release of the figures. At the time of writing, the Aussie Dollar was flat at $0.6915.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.05% to ¥107.52 against the U.S Dollar, while the Kiwi Dollar was up by 0.19% at $0.6489.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. The Eurozone’s unemployment rate for May is due out.

We would expect the figures to have a muted impact on the majors, however, barring particularly dire numbers. Economists have forecast a rise to 7.7%, so anything above 8% would weigh on the EUR…

Outside of the stats, expect market risk sentiment towards COVID-19 and the economic outlook to remain in focus. Nonfarm payroll figures from the U.S today will have a material influence on risk sentiment across the markets.

At the time of writing, the EUR was up by 0.07% to $1.1259.

For the Pound

It’s a particularly quiet day ahead on the economic calendar. There are no material stats due out of the UK, which leaves the Pound firmly in the hands of Brexit and market risk sentiment.

At the time of writing, the Pound was up by 0.06% to $1.2482.

Across the Pond

It’s another busy day on the U.S economic calendar. Key stats include June’s nonfarm payrolls and unemployment rate and the weekly jobless claims.

Trade data and May factory orders for May should have a muted impact on the majors on the day.

Away from the calendar, there could be some chatter from the Oval Office in response to the June stats…

At the time of writing, the Dollar Spot Index was down by 0.07% to 97.124.

For the Loonie

It’s a relatively quiet day ahead on the calendar. Trade figures for May are due out later today. We will expect some influence, as the markets look for signs of an improving trade environment.

Away from the calendar, expect crude oil prices to provide direction later in the day.

At the time of writing, the Loonie was down by 0.10% to C$1.3600 against the U.S Dollar.

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

A Busy Economic Calendar, the FOMC Minutes, and COVID-19 News in Focus

Earlier in the Day:

It was another busy start to the day on the economic calendar on Wednesday. The Aussie Dollar, Kiwi Dollar, and the Japanese Yen were in action early in the day. There were also stats from China for the markets to also consider.

Away from the economic calendar, there was yet another spike in new COVID-19 cases in the U.S. In spite of the continued spread, there was no major reaction from the markets early on in the day. Fiscal and monetary policy support is expected to continue to roll in. This has continued to support the demand for riskier assets.

Looking at the latest coronavirus numbers

On Tuesday, the number of new coronavirus cases rose by 201,507 to 10,583,878. On Monday, the number of new cases had risen by 153,341. The daily increase was higher than Monday’s rise and up from 158,646 new cases from the previous Tuesday.

Germany, Italy, and Spain reported 934 new cases on Tuesday, which was up from 803 new cases on Monday. On the previous Tuesday, 952 new cases had been reported.

From the U.S, the total number of cases rose by 53,471 to 2,727,853 on Tuesday. On Monday, the total number of cases had risen by 41,940. On Tuesday, 23rd June, a total of 34,399 new cases had been reported.

For the Japanese Yen

2nd quarter Tankan figures were in focus in the early part of the day:

  • All Big Industry CAPEX Index increased by 3.2%, following a 1.8% rise in the 1st quarter. Economists had forecast a 2.1% gain.
  • Big Manufacturing Outlook Index slid by 27%, off the back of an 11% decline in the 1st quarter. Economists had forecast a 24% tumble.
  • The Large Manufactures Index tumbled by 34%, following an 8% decline in the 1st quarter. Economists had forecast a 31% slide.
  • Large Non-Manufacturers Index slid by 17 to reverse an 8% gain from the 1st quarter. Economists had forecast an 18% decline.

The Japanese Yen moved from ¥107.980 to ¥108.056 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.19% to ¥107.73 against the U.S Dollar.

For the Aussie Dollar

The AIG Manufacturing Index increased from 41.6 to 51.5 in June.

According to the June Survey,

  • Parts of the manufacturing sector saw mild expansion for the first time since February.
  • While returning to expansion, there was no rebound to buoyant conditions.
  • The large food and beverage sectors reported the most significant improvement in June.
  • New orders were on the rise as trading restrictions eased.

The Aussie Dollar moved from $0.69063 to $0.69052 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.07% at $0.6908.

For the Kiwi Dollar

Building consents jumped by 35.6% in May, reversing a 6.5% decline from April.

The Kiwi Dollar moved from $0.64152 to $0.64167 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.12% at $0.6462.

Out of China

The Caixin Manufacturing PMI rose from 50.7 to 51.2 in June. Economists had forecast a decline to 50.5.

According to the June Survey,

  • Production increased for a 4th consecutive month in June, as the recovery continued.
  • While production increased, the rate of output growth eased in June.
  • Firms reported a rise in new order volumes as client demand firmed.
  • While total new orders expanded for the 1st time since January, new export orders continued to decline.
  • Employment remained on a downward trend, with staffing levels in decline for a 6th consecutive month.
  • Optimism amongst manufacturers improved to its strongest since February.

The Aussie Dollar moved from $0.69085 to $0.69093 upon release of the figures.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar. June Manufacturing PMIs are due out of Italy and Spain, with Germany’s May retail sales and unemployment figures for June also in focus.

Finalized Manufacturing PMIs are also due out of France, Germany, and the Eurozone.

For the EUR, Germany’s figures along with Italy and the Eurozone’s Manufacturing PMIs will be the key drivers.

Outside of the stats, expect market risk sentiment towards COVID-19 and the economic outlook to remain in focus. Any further talk of fresh stimulus would provide the EUR with support.

At the time of writing, the EUR was up by 0.04% to $1.1239.

For the Pound

It’s also a relatively quiet day ahead on the economic calendar. June’s finalized manufacturing PMI is due out later today.

Barring a material deviation from prelim, however, the stats should have a limited impact on the Pound.

The focus on the day will be on any updates from Brexit talks, with COVID-19 news also likely to influence.

At the time of writing, the Pound was down by 0.10% to $1.2389.

Across the Pond

It’s a busy day on the U.S economic calendar. Key stats include June’s ADP Employment Change and ISM Manufacturing PMI.

We can expect both sets of numbers to garner plenty of interest ahead of the FOMC meeting minutes due out late in the day.

June’s finalized Markit Manufacturing PMI should have a muted impact on the Dollar and the broader markets.

As always, any chatter from Capitol Hill and updates on COVID-19 will also need monitoring.

At the time of writing, the Dollar Spot Index was down by 0.06% to 97.330.

For the Loonie

It’s a quiet day ahead on the calendar. The Canadian markets are closed in recognition of Canada Day.

That leaves the Loonie in the hands of geopolitics, COVID-19, and the weekly crude oil inventory numbers.

At the time of writing, the Loonie was up by 0.07% to C$1.3567 against the U.S Dollar.

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

COVID-19 Jitters and Geopolitical Risk to Test Risk Sentiment

Earlier in the Day:

It was a quiet start to the week on the economic calendar on Monday. The Japanese Yen was in action early in the day.

Away from the stats, last week’s rise in new coronavirus cases and further spikes over the weekend weighed in riskier assets

From the weekend, May’s industrial profit and fixed asset investment figures failed to shift the negative sentiment early on.

Industrial profits were up by 6.00% in May, year-on-year, rebounding from a 4.30% slide in April. Year-to-date, however, industrial profits were down 19.3%, improving marginally from a 27.4% drop in April.

Looking at the latest coronavirus numbers

On Sunday, the number of new coronavirus cases rose by 136,417 to 10,229,030. On Saturday, the number of new cases had risen by 208,420. The daily increase was lower than Saturday’s rise while up from 131,020 new cases from the previous Sunday.

Germany, Italy, and Spain reported 650 new cases on Sunday, which was down from 1,029 new cases on Saturday. On the previous Sunday, just 917 new cases had been reported.

From the U.S, the total number of cases rose by 35,905 to 2,632,442 on Sunday. On Saturday, the total number of cases had risen by 48,661. On Sunday, 21st June, a total of 26,079 new cases had been reported.

For the Japanese Yen

According to the Ministry of Economy, Trade, and Industry, retail sales tumbled by 12.3% in May, year-on-year, following a 13.9% slide in April. Economists had forecast an 11.6% decline.

The Japanese Yen moved from ¥107.182 to ¥107.186 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.07% to ¥107.29 against the U.S Dollar.

Elsewhere

The Aussie Dollar was up by 0.06% to $0.6869, with the Kiwi Dollar up by 0.06% to $0.6427.

The Day Ahead:

For the EUR

It’s a quiet day ahead on the economic calendar. Germany and Spain’s prelim inflation figures for June are due out later today.

We don’t expect the numbers to have any material influence on the EUR, however. COVID-19 and geopolitics will likely be the key driver.

With the EU also reporting clusters over the weekend, further negative news updates would be EUR negative. There is also the threat of U.S tariffs on the EU to consider…

At the time of writing, the EUR was up by 0.13% to $1.1234.

For the Pound

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

Brexit and COVID-19 will be the key drivers on the day. Brexit news updates from the weekend were certainly not positive for the Pound. British PM Boris Johnson and the team have threatened to walk away from the table.

Talks are set to resume today…

At the time of writing, the Pound was up by 0.15% to $1.2355.

Across the Pond

It’s a relatively quiet start to a busy week on the U.S economic calendar. Key stats include May’s pending home sales figures that will likely have a muted impact on the Dollar.

The markets will likely play catch up from the weekend’s latest COVID-19 updates that point to a testy day ahead.

Later in the day, we can expect chatter from Capitol Hill, U.S states, and COVID-19 news updates to also influence.

At the time of writing, the Dollar Spot Index was down by 0.03% to 97.405.

For the Loonie

It’s a relatively busy day ahead on the calendar. Key stats include May’s RMPI and building consent figures.

We don’t expect any lasting impact on the Loonie, however, with market sentiment towards COVID-19 likely to be the key driver.

The threat of a 2nd wave pandemic would sink sentiment towards the demand for crude, which would be a negative for the Loonie.

At the time of writing, the Loonie was up by 0.19% to C$1.3662 against the U.S Dollar.

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

Economic Data, COVID-19, and Trump to Put the Greenback in the Spotlight

Earlier in the Day:

It was another relatively quiet start to the day on the economic calendar on Friday. The Japanese Yen was in action in the early part of the day.

Away from the stats, Thursday’s rise in new COVID-19 cases globally and in the U.S was of concern.

With little else for the markets to consider through the remainder of the Asian session, geopolitics will also be a concern. Following Thursday’s spike in new cases in the U.S, the U.S administration may look to deliver a distraction for voters.

Looking at the latest coronavirus numbers

On Thursday, the number of new coronavirus cases rose by 193,646 to 9,697,910. On Wednesday, the number of new cases had risen by 174,860. The daily increase was higher than Wednesday’s rise and 169,995 new cases from the previous Wednesday.

Germany, Italy, and Spain reported 1,264 new cases on Thursday, which was down from 1,463 new cases on Wednesday. On the previous Thursday, just 787 new cases had been reported.

From the U.S, the total number of cases rose by 42,480 to 2,501,653 on Thursday. On Wednesday, the total number of cases had risen by 38,253. On Thursday, 18th June, a total of 25,576 new cases had been reported.

For the Japanese Yen

In June, the Ku-area of Tokyo saw inflationary pressures remain, with the annual core rate of inflation holding steady at 0.20%. In May, core consumer prices had also risen by 0.20%, year-on-year.

According to the Ministry of Internal Affairs and Communication.

  • Rising prices for clothes and footwear (+2.2%), furniture and household utensils (+1.5%), and medical care (+1.1%) provided support.
  • There were also increases in prices for transportation & communication (+0.9%), culture & recreation (+0.8%), and housing (+0.6%).
  • A 10.2% slide in prices for education and a 1.4% fall in prices for fuel, light, & water charges partially offset rises from elsewhere.

The Japanese Yen moved from ¥107.183 to ¥107.174 upon release of the figures. At the time of writing, the Japanese Yen was flat at ¥107.19 against the U.S Dollar.

Elsewhere

At the time of writing, the Aussie Dollar down by 0.09% to $0.6881, with the Kiwi Dollar down by 0.08% to $0.6424.

The Day Ahead:

For the EUR

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

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

Expect any further spike in new cases or any further talk of tariffs on the EU to weigh on the EUR.

At the time of writing, the EUR was down by 0.01% to $1.1217.

For the Pound

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

Brexit, the threat of tariffs, and the risk of a 2nd wave COVID-19 pandemic are the key risks to the Pound.

Any negative chatter would bring $1.23 levels back into play.

At the time of writing, the Pound was up by 0.02% to $1.2421.

Across the Pond

It’s another busy day ahead on the U.S economic calendar. Key stats include May’s personal spending and FED’s preferred inflation figures.  Finalized consumer sentiment figures for June are also due out late in the day.

Barring a downward revision to prelims, we would expect today’s stats to have a muted impact on risk sentiment and the Dollar, however.

It’s Friday and Trump’s Twitter account has a tendency to get active at the end of the week. There’s a possible further breakdown of U.S – China relations and tariffs on French, German, Spanish, and UK goods to spook the markets.

We can also expect plenty of influence from the day’s COVID-19 numbers on the day and commentary from U.S states.

At the time of writing, the Dollar Spot Index was down by 0.02% to 97.410.

For the Loonie

It’s another quiet day ahead on the calendar. There are no material stats due out of Canada to provide the Loonie with direction.

A lack of stats will continue to leave the Loonie in the hands of COVID-19 updates and market risk appetite in general.

The latest spike in new COVID-19 cases has made the threat of a 2nd wave all the more real. Expect more negative reports to weigh on both crude and the Loonie.

At the time of writing, the Loonie was flat at C$1.3638 against the U.S Dollar.

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

Market Cycles : An Interview with Andrew Pancholi 

Can you tell us about how you initially became interested in the world of cycles?

As a student of economics I was introduced when the Kondratiev wave and the concept of 60 year cycles was brought up. I went on to discover other cycles and noticed that events were recurring at regular intervals. I looked at things like World War I taking place between 1914-1918 and going back 100 years and seeing the Battle of Waterloo (1815).

Many religious and philosophical texts allude to repetition in cycles, you can see it in both Hinduism and Christianity. A clear example is in the Bible, Ecclesiastes 1:9: “The thing that hath been, it is that which shall be; and that which is done is that which shall be done: and there is no new thing under the sun.”

As you look at every culture you can see that everybody follows cycles, either openly or discretely. People are not necessarily aware of them, but we have a birthday every year and of course we also have the four seasons of the year; the planting season of spring, growing season of summer, autumn harvest and then winter where everything resets for the next rotation.

When we look at markets we see similar patterns unfold in Elliott Wave, where we get the five waves up and three waves down and this really piqued my interest. Many people are familiar with the decennial cycle that was first written about in 1939 by Edgar Lawrence Smith, in his book Tides in the Affairs of Men. He basically identified that typically years ending in 5 were very bullish, years ending in 7 tended to have pullbacks, years ending in 0 and 1 tended to be bearish and that’s pretty much what we’ve been seeing.

Just as we look at the cycles from the 10 year cycle, we find that there’s a 100 year cycle – this is a fractal pattern of the 10 year cycle. 100 years on from the 1907 Rich Man’s Panic we saw the Global Financial Crisis of 2007/2008. If you were to go back to 1907 and back another 100 years, we can see the Embargo Act of 1807, which precipitated a huge crash. So basically we can see that these cycles are there and that’s really how I got into it – seeing that there is a degree of predictive capability, which is quite obvious, but few people choose to see or recognize it.

Can you describe the proprietary cycles analysis software that is used to generate the Market Timing Report?

As I continued the research of longer term cycles, it seemed obvious that there were some other smaller cycles at play. The more I looked into this, the more confusing it became so I stripped them down into different layers. The idea is that if you have a long term cycle and it coincides with a medium term cycle and also a short term or a daily cycle, then where all those three align is where we get big events coming together. So we programmed all these short term and medium term cycles in, gave them a weighting and created histograms. These histograms are predictive.

We can anticipate some of the monthly and weekly cycles several years into the future. This can be up to 10 years for some of the monthly cycles and certainly five years for the weekly cycles. This gives us an idea of where a market is likely to change trend, they are like momentum points or energy points. That was the purpose of developing the software because these calculations were far too complex to carry out by hand.

What role does seasonality and Commitments of Traders data play when combined with cycles analysis?

What we found was that we can generate tipping points in markets and 90% of the time we’d see a reversal. For me it was fairly obvious that as the market unfolded into the forthcoming time point there would be a reversal of trend. However, every now and then we saw an acceleration so we thought about how else we can get the odds on our side. What else can give us clues? Seasonality is a fairly obvious one. Most people will have heard sayings like sell in May and go away for the stock market or the Santa Claus rally.

Equally, gold has a very strong seasonal profile. In September it is generally very bullish. The more we look across different commodities, especially things that grow out of the ground we can see that they have very clear patterns because they are directly related to the seasonal growing patterns. Using seasonality helps us get the odds on our side.

Then, with the Commitment of Traders (CoT) data we can see what the smart money is doing and what the dumb money is doing. CoT data can often get to extremes, but we can be at those extremes for several weeks or even months. We know that the market is about to turn up or turn down, but we’re not sure when. The window can often be several weeks. This is where our histograms are incredibly powerful and very important because they can help accurately time things, certainly down to a week and often down to a day.

You studied extensively the work of WD Gann, Edward Dewey and Ralph Nelson Elliott. Who among these pioneers in cycles, economics and market analysis had the greatest influence on you?

Without any doubt, WD Gann is the man that has influenced me the most. Probably infuriatingly, because he writes in a very veiled way and doesn’t reveal things very clearly! You do have to be a bit of a detective. But equally it was clear that he was able to forecast future turning points as well as future price levels and he had a tremendous understanding of these things. Dewey’s work is phenomenal as too is Elliott’s, but I think Gann was probably the most important. While a lot of Gann’s life remains a mystery, it is clear that he had made the money that he had alleged to have made. He did have a wonderful mini airliner as well as a fantastic steamship yacht, that was crewed by several people. He had the trappings of a very wealthy man. His reports were very accurate. He certainly had something, I’m not sure if he had it all.

You assisted in cataloging the official WD Gann material. Can you share any interesting insights into the mysterious man that you may have discovered during the process?

Most people know that he was a meticulous curator of market material. He hand wrote and updated every single chart for every contract across a huge range of commodities and stocks. He was looking at sunspot cycles. We found a very rare chart on sunspot cycles that hasn’t gone into the public domain. There was a lot of information there on weather and clearly he would use weather forecasting to have a view on crops. Those were some of the more interesting things. He was a great student of the esoteric as well. He was involved in Freemasonry, although he was demitted from the lodge at one point.

“Andrew is prescient. I follow him.”

– Bradley Rotter, Venture Capitalist, Investor and Entrepreneur.

Which major events have you been able to accurately predict using advanced cycles analysis?

The China/India crisis is a recent example. I wrote about the polarization of America four years ago and again in the March edition of the Market Timing Report (MTR). I forecast the 2020 equity market top – we gave the date of the high in the February 2020 MTR. This was based on the 90 year cycle from 1929 and also the 180 year cycle from the 1837-42 crash and depression – this was the story of the Zero Hour book written along with Harry Dent. I was also talking about it all through the 2019 reports.

Numerous other accurate predictions include the gold market this year, the 2007/8 global financial crisis – an easy one based on the 100 year cycle from the 1907 Rich Man’s Panic – and the commodity bull runs of 2008 and 2010. The 2010 commodity bull run was 90 years on from the 1920 bull run, another 90 year cycle there. I forecast the end of the tech boom in 2000-2001, based on a 72 year cycle. A lot of the geopolitical predictions have been accurate, notably events involving Iran and South Korea. We are fortunate to have been able to create a system that does give a high degree of predictive capability.

You recently stated that we are at ‘the most critical financial time period of our generation, if not this century’ and that multiple cycles such as stock market cycles and virus cycles are now coming together. Do you think that the recent recovery in the stock market may be short lived?

I think it is the most critical time, because you very rarely see so many big different cycles coming together at the same time. Based on the previous 90 year cycles and their half cycles – which include the 45 year cycle that takes us straight back to the OPEC oil crisis in 1974, I do think we are going to get a further downturn. We’re certainly going to get a huge economic downturn. I think it’s only just starting.

The American markets have been boosted by fiscal policy but if we look at European and other markets they haven’t made anywhere near as big a recovery as those of the United States. I also believe that the way that America is intervening creates what’s called a ‘translation of the cycle’ – which moves the inevitable cycle further down the road. I do expect that we can see more to the downside. I also do think that there are going to be some curveballs in the form of global conflict coming up.

What is your outlook for gold?

I did have a significant turning point in April and we haven’t taken the April highs out yet. In the longer term I’m bullish on gold but in the shorter term I’m expecting a pullback. Our system is highlighting a significant turn point for the third week of July 2020 and within this frame we have daily cycles for the 22nd July. I am looking for a reversal then.

Can you take us deeper into your analysis of war cycles?

There are several cycles that are coming together over the next year or two. If we take the shorter term cycles, I’ve found that years ending in 1 typically tie up with conflicts. Let’s start out with 2001, which is a very clear anchor point. We’ve got 9/11 taking place on September the 11th 2001. If we head back 10 years before that to 1991, that’s when Operation Desert Storm was taking place in response to Saddam’s invasion of Kuwait in August 1990.

Go back to 1981 and there were various things going on, notably Britain had become involved in the Falklands Crisis, which was a significant international war. America had interventions going on. Go back to 1971 and again various things are taking place. American involvement in Vietnam escalates and we see various degrees of instability in the Middle East. Go back to 1961, and we see the Bay of Pigs and the heightening of the Cold War. Go back to 1951, and we see that America is involved in the Korean War. I’m just going to take it one more cycle back to 1941, the 7th of December 1941, which sees Pearl Harbour attacked by the Japanese – so you can see how this carries on.

What’s interesting is that the 60 year cycle which is the equivalent of the Kondratiev wave, is the interval between December 1941 and September 2001 – the only two times that America’s been attacked on its own soil. In between this 60 year cycle, we’ve got these increments of 10 years. As we started in 2001 let’s update this sequence. In 2011, Britain and America were involved in Libya and hunted down Gaddafi. So you can see how this ties up with the possibility of war coming in 2021.

We’ve seen an oil crisis and the price of oil collapsing earlier this year. Geopolitical tensions may escalate very shortly, over the next few months. We know that creating a war can stimulate economies and it can also divert attention away from domestic problems – and let’s face it, America has plenty of those at the moment. There is another cycle we haven’t talked about that I refer to as the Revolutionary Cycle, which is around about 82 to 84 years. 2021 will see an 82 year cycle from 1939, the outbreak of the Second World War. So I anticipate that there will be some significant conflict breaking out within the next few months to the next year and a half and I think this is going to be a game changer for the world economies.

You have talked about the 144 year cycle (1720 South Sea Bubble – 1864 Civil War Cotton boom – 2008 commodity boom). Is there any significance that 144 is a number in the Fibonacci sequence?

I’m sure there is some significance because I never say anything is coincidence any more – there is some co-incidence but not by randomness. More importantly, 144 is 8 cycles of 18 and 18 year cycles are very prevalent, they constitute a generational influence. If we go back 18 years from the outbreak of Covid-19, we find that we had SARS breaking out.

We also had 9/11 and everybody was living in fear and, of course, airline stocks were affected in both of these cases. In fact the virus cycles do follow 18 year cycles as well . 144 is 8 cycles of 18 – I’m sure there is some importance of the Fibonacci sequence there. In terms of the 144 year cycle from the South Sea Bubble to the commodity boom of the Civil War, they are linear, 144 years each time. 144 is also 12×12 so we can reference the Bible with the 12 tribes of Israel there as well. When Gann said he learned things from the Bible, I’m pretty sure this is something he was alluding to – because he only ever alluded – he never told us directly.

The importance of the 50% level was recognized by Gann in his work. In my own trading experience, it was often uncanny how price would reverse precisely at 50% retracement levels. Can you elaborate at all on the significance of this?

If only I knew why that happens – I certainly agree with you. It’s obviously a tipping point or a pivotal point. If we delve deeper into this, the 50% point is the distinction between as above so below in my opinion.

What books or study material that you can recommend for beginners?

As a board member of The Foundation for the Study of Cycles we’ve now made the archives available very cheaply online and there’s a lot of good information there. So as well as supporting the foundation as a non-profit 501(c)(3), all the back issues of the cycles magazine are now available online to read and study. They explain many of the different cycles, not just in financial markets but also in weather patterns, earthquakes and all sorts of phenomena.

Thank you very much Andrew for participating in this interview.

Visit Andrew Pancholi’s websites:

Markettimingreport.com A monthly publication that provides traders and investors with time windows of when markets are likely to reverse or change trend.

Andrewpancholi.com Andrew’s personal website.

Find Andrew on Twitter: @AndrewPancholi

By Dan Blystone, Scandinavian Capital Markets

U.S Jobless Claims, Geopolitics, and COVID-19 To Drive Risk Sentiment and the Dollar

Earlier in the Day:

It was a relatively quiet start to the day on the economic calendar on Thursday. The Kiwi Dollar was back in action in the early part of the day.

Away from the stats, it will be a testy start to the day. Risk aversion spilled into the Asian session. Reports of rising COVID-19 numbers tested risk sentiment early in the day. The number of new coronavirus cases for Wednesday, released early today, reflected the spikes.

Looking at the latest coronavirus numbers

On Wednesday, the number of new coronavirus cases rose by 174,860 to 9,504,264. On Tuesday, the number of new cases had risen by 158,646. The daily increase was higher than Tuesday’s rise and 125,202 new cases from the previous Wednesday.

Germany, Italy, and Spain reported 1,463 new cases on Wednesday, which was up from 952 new cases on Tuesday. On the previous Wednesday, just 2,480 new cases had been reported.

From the U.S, the total number of cases rose by 38,253 to 2,459,173 on Wednesday. On Tuesday, the total number of cases had risen by 34,399. On Wednesday, 17th June, a total of 23,628 new cases had been reported.

For the Kiwi Dollar

New Zealand’s annual trade deficit narrowed from NZ$2,410m to NZ$1,330m in May, which was a narrowing of NZ$1.1bn.

According to NZ Stats,

  • Imports stood at NZ$4.1bn in May 2020, down from NZ$5.6bn (-25.6%) in May 2019.
    • Motor vehicle imports slid by NZ$451m (-60.9%).
    • The import of petroleum and products fell NZ$422m (-56.2%) from May 2019.
  • Total exports fell by NZ$350m (6.1%) to NZ$5.4bn from May 2019.
    • Logs were a main contributor to the fall, down NZ$41m (-12.3%) from May 2019.

The Kiwi Dollar moved from $0.64098 to $0.64059 upon release of the numbers. At the time of writing, the Kiwi Dollar was down by 0.06% to $0.6406.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.01% to ¥107.03 against the U.S Dollar, while the Aussie Dollar down by 0.10% to $0.6862.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. Germany’s GfK Consumer Climate figures for July are due out ahead of the European session.

While we will expect some influence from the numbers, there is talk of U.S tariffs on Germany, France, and Spain. The last thing that the EU needs is a trade war, as Trump looks to divert attention away from domestic woes.

For Germany, a recent cluster and Wednesday’s rise in new COVID-19 cases across Germany, Italy, and Spain will also be a concern. A wide reintroduction of lockdown measures would send the EUR into a dive.

At the time of writing, the EUR was flat at $1.1251.

For the Pound

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

A lack of stats will continue to leave the Pound in the hands of market risk sentiment and any updates from Brexit negotiations.

At the time of writing, the Pound was down by 0.03% to $1.2415.

Across the Pond

It’s a busy day ahead on the U.S economic calendar. Key stats include the weekly jobless claims and core durable goods orders for May.

While a pickup in core durable goods orders is needed, the weekly jobless claims will need to come in well below 1.5m levels to provide any support to riskier assets…

Finalized 1st quarter GDP and May trade figures will likely take a backseat on the day.

Away from the numbers, however, the Dollar could find more support should states continue to report rising new COVID-19 cases. There could also be more trade war chatter from the Oval Office to test risk appetite further…

On Wednesday, the Dollar Spot Index rallied by 0.52% to end the day at 97.148.

For the Loonie

It’s a quiet day ahead on the calendar. There are no material stats due out of Canada to provide the Loonie with direction.

A lack of stats will leave the Loonie in the hands of COVID-19 updates and market risk appetite in general.

At the time of writing, the Loonie was down by 0.04% to C$1.3643 against the U.S Dollar.

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

The RBNZ Stands Pat, as Markets Continue to Find Relief from the June PMIs

Earlier in the Day:

It was a relatively quiet start to the day on the economic calendar on Wednesday. The RBNZ and the Kiwi Dollar were in action in the early part of the day.

With no material stats to consider, concerns over another thee spike in new COVID-19 cases returned, though overshadowed by optimism over the economic outlook.

Looking at the latest coronavirus numbers

On Tuesday, the number of new coronavirus cases rose by 158,646 to 9,329,404. On Monday, the number of new cases had risen by 126,214. The daily increase was higher than Monday’s rise and up from 156,317 new cases from the previous Tuesday.

Germany, Italy, and Spain reported 952 new cases on Tuesday, which was equal to 952 new cases on Monday. On the previous Tuesday, just 767 new cases had been reported.

From the U.S, the total number of cases rose by 34,399 to 2,420,920 on Tuesday. On Monday, the total number of cases had risen by 29,864. On Tuesday, 16th June, a total of 26,844 new cases had been reported.

For the Kiwi Dollar

The RBNZ held interest rates steady at 0.25% this morning, which was in line with market expectations.

Salient points from the Rate Statement that preceded the RBNZ Press Conference later this morning included:

  • The Committee agreed to continue with the LSAP program set at NZ$60bn and fore the cash rate to remain at 0.25%.
  • Global restrictions rolled out to mitigate the spread of COVID-19 provoked a severe downturn in the NZ economy.
  • Committee members have yet to see a full set of evidence to determine how the pandemic is affecting the economy. Members did agree, however, that the June quarter would show a substantial decline in economic activity.
  • Economic risks remain to the downside despite some high-frequency data suggesting the demand has increased since the end of Alert Level 2 Restrictions.
  • Uncertainty also remained over the extent of the continued job losses and reduced activity.
  • Much will depend on how willing households and businesses are to spend or invest in the current environment.
  • Member noted that the move to Alert Level 1 arrived sooner than previously assumed supporting an earlier than expected rise in spending.
  • It was also noted, however, that these positives could be short-lived.
  • The Committee agreed that it is not yet clear whether the monetary policy stimulus delivered to date is sufficient to meet its mandate.
  • Reserve Bank staff will provide a more detailed briefing on financial stability for the August monetary policy decision.
  • Staff is also working towards ensuring a broader range of monetary policy tools that could be deployable in the coming months. These would include a term lending facility, reductions in the OCR, and foreign asset purchases, and the appropriate quantum of the LSAP.

The Kiwi Dollar moved from $0.64951 to $0.64763 upon release of the rate statement. At the time of writing, the Kiwi Dollar was down by 0.06% to $0.6487, with the RBNZ press conference up next.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.02% to ¥106.50 against the U.S Dollar, with the Aussie Dollar up by 0.33% to $0.6953.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. Germany’s IFO Business Climate Index figures are due out early in the European session.

The figures have a tendency to influence the EUR and there will likely be plenty of interest in the headline figure. Expect the Business Expectations Index to also influence, however. This will give the markets some idea of what kind of business investment and hiring to expect near-term.

At the time of writing, the EUR was up by 0.15% to $1.1325.

For the Pound

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

A lack of stats will leave the Pound in the hands of market risk sentiment and any updates from Brexit negotiations.

At the time of writing, the Pound was up by 0.07% to $1.2529.

Across the Pond

It’s also a particularly quiet day ahead on the U.S economic calendar. There were no material stats due out of the U.S, leaving the Dollar in the hands of the news wires on the day.

Trump and updates on new COVID-19 cases will remain a key focal point for the markets near-term.

At the time of writing, the Dollar Spot Index was down by 0.06% to 96.585.

For the Loonie

It’s yet another quiet day ahead on the economic calendar. There are no material stats due out of Canada to provide the Loonie with direction.

A lack of stats will leave the Loonie in the hands of the weekly API and EIA crude oil inventory numbers and daily COVID-19 figures.

While risk appetite improved following the latest PMI numbers, any talk of lockdown measures in the U.S or the EU would weigh heavily.

At the time of writing, the Loonie was up by 0.04% to C$1.3544 against the U.S Dollar.

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

U.S – China Trade Deal “Over”! The News Hits the Wires as the Markets Prepare for June’s PMIs.

Earlier in the Day:

It was a busier start to the day on the economic calendar on Tuesday. The Aussie Dollar and Japanese Yen were in action early on, with prelim June private sector PMIs in focus.

Outside of the numbers, the latest COVID-19 news also drew attention early in the day, supporting riskier assets.

This time around, it was U.S anger over China’s apparent delay in sounding the alarm bells that weighed on risk sentiment. Reports hit the news wires this morning of U.S trade adviser Navarro stating that the trade deal with China is ‘Over”.

Looking at the latest coronavirus numbers

On Monday, the number of new coronavirus cases rose by 126,214 to 9,170,758. On Sunday, the number of new cases had risen by 131,020. The daily increase was lower than Sunday’s rise, while up from 115,910 new cases from the previous Monday.

Germany, Italy, and Spain reported 952 new cases on Monday, which was up from 917 new cases on Sunday. On the previous Monday, just 855 new cases had been reported.

From the U.S, the total number of cases rose by 29,864 to 2,386,521 on Monday. On Sunday, the total number of cases had risen by 26,079. On Monday, 15th June, a total of 19,412 new cases had been reported.

From Australia

The Commbank Manufacturing PMI rose from 44 to 49.8 in June, according to prelim figures. Economists had forecast a rise to 49.3. Service sector activity impressed with a return to expansion, however. The Services PMI jumped from 26.9 to 53.2 Economists had forecast a rise to 27.7.

The Aussie Dollar moved from $0.69232 to $0.69209 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.52% to $0.6872. A reversal kicked in from the news from the U.S on the U.S – China trade agreement…

For the Japanese Yen

The Manufacturing PMI fell from 38.4 to 37.8, while the Services PMI increased from 26.5 to 42.3. Economists had forecast PMIs of 47.5 and 40.6 respectively.

According to the prelim June Survey,

  • Manufacturing production fell at an accelerated rate and the most severe since March 2009. Employment across the sector also fell at a faster pace in June.
  • For the services sector, new business declined at a materially slower pace in June, with employment stabilizing.
  • Service sector support came from the lifting of the state of emergency.

The Japanese Yen moved from ¥106.931 to ¥106.928 against the Dollar upon release of the figures. At the time of writing, the Japanese Yen was up by 0.13% to ¥106.77 against the U.S Dollar.

Elsewhere

At the time of writing, the Kiwi Dollar was down by 0.48% to $0.6449, with chatter from the U.S weighing.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar. Prelim June private sector PMIs are due out of France, Germany, and the Eurozone.

We can expect plenty of influence from the numbers, though the services PMI should garner greater interest.

The ECB had been looking towards a service sector-driven recovery before the COVID-19 pandemic. This reliance may be even greater now as unemployment bites across the Euro bloc.

At the time of writing, the EUR was down by 0.20% to $1.1239. Negative chatter from the U.S administration drove the EUR into the red early on.

For the Pound

It’s a relatively busy day ahead on the economic calendar. June’s prelim private sector PMIs are due out later today.

Expect the market focus to be on the Services PMI that will need to see a marked improvement. It could get a little dicey for the Pound if any weak numbers are accompanied by negative Brexit updates…

At the time of writing, the Pound was down by 0.18% to $1.2446, with risk aversion weighing.

Across the Pond

It’s a busy day ahead on the U.S economic calendar. Key stats include new home sales figures for May. And prelim June private sector PMIs.

Again, we would expect the Services PMI to have the greatest impact on the day. Don’t expect too much from the new home sales and manufacturing PMI, barring particularly dire numbers.

For the markets, an upward trend from April’s historic lows would need to continue across the private sector. Any weak numbers and expect risk aversion to sweep across the global financial markets.

Away from the numbers, geopolitics and COVID-19 news from the U.S will remain a key driver.

Monday’s announcement by Navarro drove Dollar demand early.

At the time of writing, the Dollar Spot Index was up by 0.14% to 97.178.

For the Loonie

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

A lack of stats will leave the Loonie in the hands of market risk sentiment and COVID-19 news and updates and PMI numbers.

Any disappointing PMI numbers from the Eurozone or the U.S would likely test sentiment towards the economic outlook… The markets are hopeful of a V-shaped economic recovery. Today’s PMIs could give some idea of what lies ahead.

An end to a trade agreement between the U.S and China would overshadow any positive PMIs, however.

At the time of writing, the Loonie was down by 0.24% to C$1.3554 against the U.S Dollar.

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

A Quiet Economic Calendar Leaves Geopolitics and COVID-19 to Drive the Markets

Earlier in the Day:

It was a quiet start to the day on the economic calendar on Monday. While there were no material stats to provide direction, the PBoC was in action early on.

From elsewhere, an easing of new COVID-19 cases over the weekend was positive. The numbers remain higher than the previous weekend, however, so need monitoring.

Looking at the latest coronavirus numbers

On Sunday, the number of new coronavirus cases rose by 131,020 to 9,044,544. On Saturday, the number of new cases had risen by 155,790. The daily increase was lower than Saturday’s rise while up from 124,839 new cases from the previous Sunday.

Germany, Italy, and Spain reported 917 new cases on Sunday, which was down from 1,183 new cases on Saturday. On the previous Sunday, just 909 new cases had been reported.

From the U.S, the total number of cases rose by 26,079 to 2,356,657 on Sunday. On Saturday, the total number of cases had risen by 33,388. On Sunday, 14th June, a total of 19,920 new cases had been reported.

From China

The PBoC held the 5-year Loan Prime Rate (“LPR”) at 4.65% and the 1-year LPR at 3.85%. Economists had forecast cuts to 4.50% and 3.70% respectively.

The Aussie Dollar moved from $0.68407 to $0.68453 in response to the PBoC’s hold on rates. At the time of writing, the Aussie Dollar was up by 0.10% to $0.6842.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.02% to ¥106.89 against the U.S Dollar, while the Kiwi Dollar was up by 0.12% to $0.6415.

The Day Ahead:

For the EUR

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

A lack of stats will leave the EUR in the hands of market risk sentiment on the day. News of easing tensions between the U.S and China and a fall in the daily number of new cases over the weekend are positives early on.

At the time of writing, the EUR was up by 0.09% to $1.1188.

For the Pound

It’s a relatively quiet day ahead on the economic calendar. June’s CBI Industrial Trend Orders are due out later today.

With a quiet economic calendar on the day, we can expect some influence from the numbers. While the numbers will draw attention, we would expect chatter on Brexit to have the greatest impact on the day, however.

At the time of writing, the Pound was up by 0.13% to $1.2366.

Across the Pond

It’s also a quiet day ahead on the U.S economic calendar. Key stats include existing home sales figures for May.

We don’t expect any influence from the numbers. The housing sector has been on a rebound with mortgage rates sitting at record lows. Inventories are expected to begin to limit upward momentum, however.

Away from the numbers, geopolitics and COVID-19 news from the U.S will remain the key driver.

At the time of writing, the Dollar Spot Index was down by 0.01% to 97.618.

For the Loonie

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

A lack of stats will leave the Loonie in the hands of market risk sentiment and COVID-19 news and updates.

China’s agreement to ramp up the imports of soybeans, corn, and ethanol should ease some of the pain. The markets will want to see the number of new COVID-19 cases continue to drop back from last week’s highs, however.

At the time of writing, the Loonie was up by 0.08% to C$1.3596 against the U.S Dollar.

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

Retail Sales Put the Loonie and Pound in Focus COVID-19 Concerns Linger

Earlier in the Day:

It was a quiet start to the day on the economic calendar on Friday. The Japanese Yen was in action early on.

Inflation figures from Japan had little influence on the broader markets, however, with COVID-19 and U.S stats providing direction early on.

Looking at the latest coronavirus numbers

On Thursday, the number of new coronavirus cases rose by 169,995 to 8,551,856. On Wednesday, the number of new cases had risen by 125,202. The daily increase was higher than Wednesday’s rise and 136,875 new cases from the previous Thursday.

Germany, Italy, and Spain reported 787 new cases on Thursday, which was down from 2,480 new cases on Wednesday. On the previous Thursday, just 1,091 new cases had been reported.

From the U.S, the total number of cases rose by 25,576 to 2,257,604 on Thursday. On Wednesday, the total number of cases had risen by 23,628. On Thursday, 11th June, a total of 23,403 new cases had been reported.

For the Japanese Yen

Deflationary pressures persisted in May, with core consumer prices falling by 0.2% year-on-year, which was at the same pace as in April. Economists had forecast a 0.1% decline.

According to figures released by the Ministry of Internal Affairs and Communication., the annual rate of inflation held steady at 0.1%.

The Japanese Yen moved from ¥107.003 to ¥107.030 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.04% to ¥106.93 against the U.S Dollar.

Elsewhere

At the time of writing, the Aussie Dollar was down by 0.09% to $0.6846, with the Kiwi Dollar down by 0.28% to $0.6411.

The Day Ahead:

For the EUR

It’s another quiet day ahead on the economic calendar. Economic data is limited to Germany’s wholesale inflation figures for May, which are unlikely to have an impact on the EUR.

Following the recent uptick in new COVID-19 cases, weak economic data from the U.S added to the market angst. With Germany also seeing a recent spike in new cases, governments may become cautious in fully reopening.

Such an outcome would be EUR negative.

At the time of writing, the EUR was down by 0.04% to $1.1201.

For the Pound

It’s a busy day ahead on the economic calendar. May retail sales figures are due out of the UK later this morning.

Economists have forecasted a partial recovery from the tumble in April. Anything in line or worse than forecasts would likely weigh on the Pound.

While the numbers will influence, expect Brexit chatter to also provide direction.

At the time of writing, the Pound was down by 0.10% to $1.2412.

Across the Pond

It’s also a quiet day ahead on the U.S economic calendar. Key stats are limited to 1st quarter current account figures.

We don’t expect any influence from the numbers. That leaves the Dollar in the hands of market risk sentiment and COVID-19 on the day.

Late in the day, FED Chair Powell is speaking once more that could be a test for the bulls. Is there anything left for the FED Chair to add after Monday’s move and mid-week testimony?

At the time of writing, the Dollar Spot Index was up by 0.05% to 97.473.

For the Loonie

It’s a busy day ahead on the economic calendar. April retail sales figures are due out later this afternoon.

While these are April figures, we can expect some influence on the Loonie.

Ultimately, however, market risk sentiment will be the key driver. As the week comes to a close, the U.S administration may look to change the narrative with another fiscal stimulus package.

It would need to be impressive to offset market angst over COVID-19 numbers, however…

At the time of writing, the Loonie was down by 0.10% to C$1.3613 against the U.S Dollar.

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

COVID-19 Jitters Hit Early as Focus Shifts to the BoE and the Pound…

Earlier in the Day:

It was yet another busy start to the day on the economic calendar on Thursday. The Aussie Dollar and the Kiwi Dollar were in action early on.

While there was plenty of attention to the numbers, the markets also considered the recent uptick in COVID-19 numbers. The threat of another wave of lockdown measures has risen in recent days.

Looking at the latest coronavirus numbers.

On Wednesday, the number of new coronavirus cases rose by 125,202 to 8,381,861. On Tuesday, the number of new cases had risen by 156,317. The daily increase was lower than Tuesday’s rise and 128,469 new cases from the previous Wednesday.

Germany, Italy, and Spain reported 2,480 new cases on Wednesday, which was up from 767 new cases on Tuesday. On the previous Wednesday, just 510 new cases had been reported. Notably, Germany reported 1,797 new cases on Wednesday. This was the first time Germany has reported more than 1,000 cases since 8th May…

From the U.S, the total number of cases rose by 23,628 to 2,232,028 on Wednesday. On Tuesday, the total number of cases had risen by 26,844. On Wednesday, 10th June, a total of 20,674 new cases had been reported.

News from China of fresh lockdown measures in Beijing was coupled with news of record spikes across six U.S states. This was later followed up with news of 10 states seeing their highest 7-day average since the start of the pandemic.

Another lockdown across U.S states would be a catastrophe. It may also spell the end of Trump’s political career…

For the Kiwi Dollar

The New Zealand economy contracted by 1.6% in the 1st quarter, following 0.5% growth in the 4th quarter. Economists had forecast a 1% contraction.

According to NZ Stats,

  • Service industries contributed the most to the drop in activity, accounting for almost half of the overall fall in GDP.
    • The hospitality industry fell by 7.8%, with the construction and warehousing industries falling by 4.1% and 5.2% respectively.
    • Household consumption expenditure fell by 0.3%. Spending on durables and non-essential goods and services weighed. A jump in spending on short life-cycle goods offset the declines.
  • This was the largest quarterly decline since a 2.4% contraction in March 1991 and larger than during the global financial crisis.

The Kiwi Dollar moved from $0.64757 to $0.64562 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.46% to $0.6427.

For the Aussie Dollar

It was the all-important employment figures this morning.

Total employment slid by 227,700 in May, following a 594,300 tumble in April. Economists had forecast a fall of 125,000. Full employment fell by 89,100, following a 220,500 slide in April. In May, the unemployment rate increased from 6.2% to 7.1%, following on from a rise from 5.2% to 6.2% in April. Economists had forecast an unemployment rate of 7.0%.

According to the ABS,

  • The total number of people in full-time employment fell by 89,100, with people in part-time employment decreasing by 138,600.
  • Since May 2019, full-time employment decreased by 237,900 people, with part-time employment falling by 457,700 people.
  • The employment to population ratio fell by 1.1 pts to 58.4% in May 2020.

The Aussie Dollar moved from $0.68763 to $0.68401 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.60% to $0.6843.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.24% to ¥106.75 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s a quiet day ahead on the economic calendar, with no material stats due out to provide direction. A lack of stacks will leave the EUR in the hands of the ECB Economic Bulletin due later this morning.

We’re not expecting any positive chatter from the ECB just yet but there could be a sprinkle of hope that would give the EUR a boost.

As we have heard from the FED, however, the Eurozone economy is also likely to face a tough journey ahead. That should keep the optimism to a minimum, particularly following recent comments from ECB President Lagarde. As a reminder, Lagarde saw the Eurozone economy aligned with the ECB’s worst-case scenario projections.

Away from the economic calendar, the markets will need to keep an eye on the latest COVID-19 news and updates. This remains the biggest risk to any hopes of a speedier economic recovery.

The reported spike in new cases from Germany will be a concern.

At the time of writing, the EUR was down by 0.07% to $1.1236.

For the Pound

It’s a big day ahead on the economic calendar. While there are no material stats due out of the UK to provide the Pound with direction, the BoE is in action.

April’s GDP numbers were particularly dire, which led to BoE Governor Bailey stating that the BoE was ready and able to act. The proof is always in the pudding…

With interest rates at 0.1%, however, what will the BoE offer?

The markets are expecting an additional £100bn in QE and for the Bank to leave interest rates at 0.1%. Let’s not forget that the Bank is due to release its review of negative rates later in the year, so there should be at least a bottom on rates for now…

That £100bn in additional QE may disappoint the markets, however, which could support the Pound. After all, when you consider steps taken by other central banks of late, this would be fairly conservative. And that’s before you consider the state of the UK economy.

Whatever happens, do keep an eye on the vote count…

Also in focus, is Brexit though we do expect the BoE to be the headline of the day.

At the time of writing, the Pound was down by 0.15% to $1.2536.

Across the Pond

It’s also another relatively busy day ahead on the U.S economic calendar. Key stats include June’s Philly FED Manufacturing Index and the all-important weekly jobless claims figures.

We will expect today’s numbers to influence the Dollar and the global financial markets in general.

Economists have forecast a 1.3m jump in claims in the week ending 12th June. That is still quite a hefty number, though a downward trend from previous weeks may be well received.

The Philly FED Manufacturing Index number will need to come in ahead of forecasts, however. We saw NY State numbers impress and the Philly headline figure has much more influence on the markets.

Away from the stats, COVID-19 news and chatter from the Oval Office will also need monitoring. FED Chair Powell and the team have delivered another bazooka. What has Capitol Hill got in response?

Expect any talk of a return of lockdown measures to spook the markets.

At the time of writing, the Dollar Spot Index was up by 0.12% to 97.038.

For the Loonie

It’s a busy day ahead on the economic calendar. April wholesale sales figures are due out along with house price numbers for May. While normally of less influence, we will also expect the ADP nonfarm employment change figures to garner interest.

As always, much will depend on the mood of the market. Any risk aversion and concern over a 2nd wave pandemic and expect crude oil prices and the Loonie to struggle.

At the time of writing, the Loonie was down by 0.21% to C$1.3594 against the U.S Dollar.

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

From Lockdown to Riots: Why Our Next Steps Are Crucial to the Future

by Giles Coghlan, Chief Currency Analyst at HYCM

From the unexpected election of President Trump to the results of the Brexit referendum to the gilets jaunes in France and the rise of right-wing populist movements in Europe and beyond.

As 2019 gave way to 2020, we saw headlines about trade war and recession being replaced by headlines about the coronavirus epidemic, the initial breakdown in sense-making across the globe regarding how to handle it, the incredible market shocks that followed, and a tentative calm before the next storm as countries gradually opened up and citizens tried to get back to normal. Then, the recent tragic killing of George Floyd at the hands of the Minneapolis police department ignited protests, civil unrest and riots that refused to remain local, spreading not just across the United States, but across the entire world.

But what do all of these radically different events and causes have in common? And why does it increasingly seem like the world is a powder keg awaiting a willing match to ignite it? According to the Global Peace Index for 2020, a yearly survey put together by the Institute for Economics and Peace (IEP), civil unrest has doubled since 2011, with a total of 96 countries having experienced violent demonstrations in 2019.

The report highlights that this trend is likely to continue with increased political instability being on the cards, as well as worsening “international relations, conflict, civil rights and violence, undoing many years of socio-economic development.”; all of this due, in part, to the economic fallout from COVID-19.

2008: The scar that never healed

Ordinary people watched in astonishment in the wake of the Great Financial Crisis as the banks responsible for the crisis were bailed out with taxpayer money, and austerity policies were widely inflicted on populations in order to ease the global economy out of the crisis and avoid a complete financial meltdown.

A 2018 study by the Organisation for Economic Cooperation and Development (OECD) found that wealth inequality had increased in both the United States and the United Kingdom since the Great Recession. The changes were put down to a combination of factors, which included “falling house prices in the aftermath of the crisis, lower rates of home ownership, and higher prices of financial assets in the recovery benefiting those at the top of distribution.”

These last two points are important to keep in mind. Financial crises can be opportunities for those at the bottom of the ladder to gain access to assets that were beyond their reach prior to the crash. This includes both securities and property. In the aftermath of 2008, this did not take place. The accommodative policies of central banks across the globe saw money that was meant to spur growth disproportionately benefiting the wealthy by entering the shadow banking system and inflating property prices from their lows. In fact, in the US, home ownership among millennials has been shown to have declined by 20% between 2009 and 2019.

If anything, the 2008 crisis has consolidated wealth in the hands of older generations (those who held it prior to 2008) and has hindered younger generations from gaining access to it. When the boomer generation (born between 1946 and 1964) were roughly the same age as the millennial generation is now (born between 1981 and 1996), they owned around 21% of America’s wealth, millennials currently own around 3%.

The OECD report found similar trends in other countries. “During the financial crisis and in its immediate aftermath, mean household wealth fell considerably for households with heads under the age of 35 in Australia, the United Kingdom and Italy, while it rose in real terms in these same countries for households with heads aged 65 or older.”

The trend is perhaps even clearer when you zoom further out to the richest among us. At the beginning of 2019, Oxfam released a report to coincide with the World Economic Forum in Davos showing that the number of billionaires who own as many assets as half of the world’s population fell from 43 in 2017, to 26 in 2018. Please read that statistic again.

What’s it got to do with COVID?

In short, everything. In this most recent case of civil disobedience, the eruption of public sentiment had to do with race inequality and yet another instance of abuse of police power. In Lebanon, October’s demonstrations were sparked by a proposed tax on calls made through WhatsApp. In Chile, they had to do with a hike in subway fares. In France, it was fuel taxes. In Hong Kong, Chinese overreach. However, what unites all of these demonstrations is a general mood of distrust in institutions, politicians, and business as usual.

As the protests over George Floyd’s death morphed into riots and spread across the United States and then overseas, the Nasdaq was busy recording an all-time high, breaking February’s former high on June 5th and then going on to close above 10,000 for the first time in its history on June 9th. This, despite 1 in 7 Americans being unable to find work as of May 2020, which is the highest level of unemployment Americans have experienced since the Great Depression.

Of course, the Nasdaq is heavily weighted towards information technology stocks, which goes some way to explaining this complete dislocation between its performance and conditions on the ground. However, we’ve also seen the S&P 500 recently breaking above its 62% retracement level, which has historically acted as a significant point of resistance during many of the largest bear market bounces in history, including the DOW in 1929.

If there’s a theme to any of this, it’s consolidation across the board. The largest 5 US stocks (Amazon, Apple, Facebook, Google, and Microsoft) now account for around a fifth of the entire S&P market cap, a larger percentage, even, that the top 5 did during the Dotcom bubble.

Like 2008, the coronavirus crisis has provided the world with another unexpected systemic shock, albeit of a different variety. The manner in which we manage our way out of this new crisis could be the deciding factor as to whether the future will hold more civil unrest and widespread distrust in institutions (and the democratic method), or whether we can go some way to healing the wounds that were inflicted post-2008 which have just been ripped open again. If the measures we collectively adopt to get ourselves out of this crisis continue to consolidate power and wealth in the hands of the few, leaving the rest – particularly the young – on the outside looking in, then the recent bouts of rioting we’ve seen could just be getting started.

Trade with HYCM

High Risk Investment Warning: Contracts for Difference (‘CFDs’) are complex financial products that are traded on margin. Trading CFDs carries a high degree of risk. It is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent expert advice if necessary and speculate only with funds that you can afford to lose.

Please think carefully about whether such trading suits you, taking into consideration all the relevant circumstances as well as your personal resources. We do not recommend clients posting their entire account balance to meet margin requirements. Clients can minimise their level of exposure by requesting a change in leverage limit. For more information please refer to HYCM’s Risk Disclosure.

It’s a Quiet Economic Calendar. Riskier Assets Will Need another Catalyst…

Earlier in the Day:

It was another busy start to the day on the economic calendar on Wednesday. The Aussie Dollar, Kiwi Dollar, and the Japanese Yen were in action early on.

Following Tuesday’s rally, however, there was an uptick in new COVID-19 cases to consider.

Looking at the latest coronavirus numbers.

On Tuesday, the number of new coronavirus cases rose by 156,317 to 8,256,659. On Monday, the number of new cases had risen by 115,910. The daily increase was higher than Monday’s rise and up from 128,377 new cases from the previous Tuesday.

Germany, Italy, and Spain reported 767 new cases on Tuesday, which was down from 855 new cases on Monday. On the previous Tuesday, 843 new cases had been reported.

From the U.S, the total number of cases rose by 26,844 to 2,208,400 on Tuesday. On Monday, the total number of cases had risen by 19,412. On Tuesday, 9th June, a total of 19,894 new cases had been reported.

For the Kiwi Dollar

1st quarter current account figures were in focus that had a muted impact on the Kiwi.

Quarter-on-quarter, the current account balance rose from a NZ$2.66bn deficit to a NZ$1.56bn surplus. Economists had forecast a surplus of NZ$1.48bn.

Year-on-year, the current account deficit narrowed from NZ$9.23bn to NZ$8.51bn. Economists had forecast a narrowing to NZ$8.47bn.

The Kiwi Dollar moved from $0.64425 to $0.64490 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.09% to $0.6445.

For the Aussie Dollar

The housing sector was back in focus. According to the HIA, new home sales fell by 4.20% in May, following a 1.1% fall in April. Economists had forecast a 0.5% decline.

The Aussie Dollar moved from $0.68933 to $0.68793 upon release of the figures and minutes. At the time of writing, the Aussie Dollar was down by 0.28% to $0.6870.

For the Japanese Yen

Japan’s trade deficit narrowed from ¥931.9bn to ¥833.4bn in May. Economists had forecast a narrowing to ¥560.0bn.

According to figures released by the  Ministry of Finance,

  • Exports tumbled by 28.3% in May, following a 21.9% slide in April. Economists had forecast a 22.7% slide.
    • Exports to China fell by 1.9%, with exports to South Korea and Thailand sliding by 18% and by 32.9% respectively.
    • To the U.S, exports slumped by 50.6%, with exports tumbling by 35.4% to Western Europe.
    • Exports to Germany fell by 35.5%, with exports to the UK tumbling by 38.2%.
  • Imports tumbled by 26.2% in May, following a 7.1% decline in April. Economists had forecast a 12.9% slide.
    • Imports from China fell by 2.0%, while imports from HK tumbled by 39%.
    • From the U.S imports slumped by 27.5%, with imports from the EU falling by 30.9%.

The Japanese Yen moved from ¥107.369 to ¥107.278 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.08% to ¥107.23 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. May’s finalized inflation figures for the Eurozone are due out later today.

We would expect the figures to have a muted impact on the EUR, however. Market risk sentiment and continued reaction to FED Chair Powell’s testimony will be the key driver.

For the EUR, a lack of a material spike in new COVID-19 cases remains positive. While China and the U.S have seen a pickup in new cases, the most adversely affected EU states have yet to report a similar trend.

At the time of writing, the EUR was up by 0.06% to $1.1271.

For the Pound

It’s a relatively busy day ahead on the economic calendar. Key stats include May inflation figures that should have a muted impact on the Pound ahead of tomorrow’s BoE monetary policy decision.

The focus on the day will be on Brexit, as the EU and the British government look to avoid a hard Brexit event.

At the time of writing, the Pound was down by 0.09% to $1.2562.

Across the Pond

It’s also a relatively busy day ahead on the U.S economic calendar. Key stats include building permits and housing start figures for May.

We aren’t expecting too much influence from the stats, however. The housing sector has seen activity rebound as lockdown measures ease, supported by mortgage rates hovering at record lows.

With the stats of little influence, FED Chair Powell’s 2nd day of testimony to Congress may draw some interest. At the start of the week, we saw the FED prop up the U.S equity markets… Will there be any more probing questions into the FED’s decision to begin purchasing individual corporate bonds?

At the time of writing, the Dollar Spot Index was up by 0.05% to 97.008.

For the Loonie

It’s a busy day ahead on the economic calendar, with May inflation figures due out later today.

We can expect some influence from the numbers, though the weekly crude oil inventory numbers and market risk sentiment will remain key drivers.

There’s also OPEC’s monthly report to consider…

At the time of writing, the Loonie was down by 0.04% to C$1.3546 against the U.S Dollar.

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

Economic Data and FED Chair Powell Put the Pound and Greenback in the Spotlight

Earlier in the Day:

It was a busy start to the day on the economic calendar this morning. The Aussie Dollar and Kiwi Dollar were in action early on, with the Bank of Japan and Japanese Yen in focus later this morning.

In spite of the busy start to the day, the economic calendar took a back seat as the markets reacted to the FED move on Monday. The FED’s announcement to buy individual corporate bonds led to a Monday rebound in the U.S equity markets. This continued through the early part of the Asian session, which also supported the Aussie and Kiwi Dollar.

Looking at the latest coronavirus numbers.

On Monday, the number of new coronavirus cases rose by 115,910 to 8,100,342. On Sunday, the number of new cases had risen by 124,839. The daily increase was lower than Sunday’s rise while up from 102,703 new cases from the previous Monday.

Germany, Italy, and Spain reported 855 new cases on Monday, which was down from 909 new cases on Sunday. On the previous Monday, 783 new cases had been reported.

From the U.S, the total number of cases rose by 19,412 to 2,181,556 on Monday. On Sunday, the total number of cases had risen by 19,920. On Monday, 8th June, a total of 18,206 new cases had been reported.

For the Kiwi Dollar

Consumer sentiment weakened in the 2nd quarter, with the Westpac consumer sentiment index falling from 104.2 to 97.2. The downside was attributed to the impact of the COVID-19 pandemic on the economy. In the 1st quarter, the Index had fallen from 109.9 to 104.2.

According to the latest Westpac report,

  • As a result of a deep recession, stemming from the COVID-19 pandemic, households reined in spending plans
  • The Present Conditions Index fell from 103.4 to 94.1, following a fall from 110.1 to 103.4 in the 1st quarter. Sentiment towards the economic outlook also softened, with the Expected Conditions Index falling from 104.7 to 99.3. In the 1st quarter, the Index had fallen from 109.8 to 104.7. Both fell further below their long-run averages of 108.5 and 112.5 respectively.

Looking at the sub-indexes, the declines were considered modest, though an expected rise in unemployment could lead to heavier losses.

  • The 1-year economic outlook sub-index slid from -15.4 to -28.3, following a fall from 4.2 to -15.4 in the 1st quarter. The long-run average stood at -2.8.
  • The expected financial situation sub-index fell from 19.9 to 14.7, reversing a rise from 15.5 to 19.9 in the 1st quarter. In spite of the fall, it remained well above the long-run average of 11.4.
  • The ‘Good time to Buy’ Index declined from 8.4 to 1.5. In the 1st quarter, the Index had fallen from 21.1 to 8.4.
  • Looking further down the track, the 5-year economic outlook sub-index increased from 9.7 to 11.6, after holding steady in the 1st quarter. Despite the rise, however, the sub-index sits well below its long-run average of 29.0.

The Kiwi Dollar moved from $0.64737 to $0.64676 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.12% to $0.6482.

For the Aussie Dollar

House prices rose by 1.6% in the 1st quarter, following a 3.9% increase in the 4th quarter. Economists had forecast a 2.7% rise.

The main driver this morning, however, was the RBA meeting minutes.

Salient points from the minutes included:

  • Members recognized that the Australian economy was experiencing the biggest contraction since the 1930s.
  • There was a marked increase in job losses or zero-hours worked, leading to a material weakening in household spending.
  • In spite of this, it was possible that the downturn would be shallower than earlier anticipated.
  • The rate of new infections had declined significantly, leading to some easing of restrictions earlier than expected.
  • Uncertainty remained, however, and the pandemic was likely to have long-lasting effects on the economy.
  • Members agreed that Bank policy was working broadly as expected, lowering funding costs, stabilizing financial conditions, and supporting the economy.
  • The yield target was expected to remain in place until there was progress towards the goals for full employment and inflation.
  • A combination of substantial, coordinated, and unprecedented easing of fiscal and monetary policy was helping the economy.

The Aussie Dollar moved from $0.69418 to $0.69399 upon release of the figures and minutes. At the time of writing, the Aussie Dollar was up by 0.32% to $0.6941.

For the Japanese Yen

It will be all eyes on the Bank of Japan, its monetary policy decision, and Governor Kuroda’s press conference.

At the time of writing, the Japanese Yen was up by 0.02% to ¥107.31 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar Key stats include ZEW economic sentiment figures from Germany and the Eurozone for June. Later in the day, 1st quarter wage growth numbers for the Eurozone are also due out.

We would expect the markets to brush aside wage growth numbers. Economic sentiment figures for both, Germany and the Eurozone will provide direction, however.

Following the EU’s budget and COVID-19 recovery plans, we may see a 3rd consecutive monthly rise. Expect any pullback to pressure the EUR.

Away from the economic calendar, COVID-19, and FED Chair Powell will be key areas of focus on the day.

At the time of writing, the EUR was up by 0.06% to $1.1330.

For the Pound

It’s also a busy day ahead on the economic calendar. Key stats include April’s unemployment rate and May’s claimant counts. Average wage growth and employment change figures for April are also due out.

We would expect May’s claimant count figure to have the greatest impact on the day. The UK was in full lockdown mode in April and only began easing measures in earnest through late May.

Following last week’s GDP numbers and with the BoE in action this week, the Pound will be sensitive to the numbers.

On the geopolitical front, expect chatter on Brexit to also garner plenty of attention.

At the time of writing, the Pound was up by 0.20% to $1.2630.

Across the Pond

It’s a busy day ahead on the U.S economic calendar. Key stats include May retail sales and industrial production figures.

With the U.S government easing lockdown measures through May, the markets will be looking for a pickup in spending. Consumer spending and a pickup in service sector activity is key to the U.S economic recovery. Disappointing numbers would overshadow any upbeat industrial production figures.

We will expect April’s business inventory numbers, also due out later today, to have a muted impact.

While the stats will influence, FED Chair Powell’s testimony to Congress that proceeds the retail sales figures will be the main event.

It’s hard to imagine the FED Chair to material shift from last week’s FOMC press conference, which should test market resilience. The talk of unwavering support, however, would ease the pain.

At the time of writing, the Dollar Spot Index was down by 0.13% to 96.585.

For the Loonie

It’s a relatively quiet day ahead on the economic calendar. April’s foreign securities purchase figures are due out later this afternoon.

We’re not expecting the numbers to influence, however, with COVID-19 news updates and FED Chair Powell the key drivers.

At the time of writing, the Loonie was up by 0.21% to C$1.3543 against the U.S Dollar.

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