15/ 07/ 2020

ECB Stimulus hopes & OPEC Meeting in Focus

The euro rose to a four-month high against the dollar on hopes European Union leaders may agree on stimulus and deepening fiscal integration to shield the economy from the pandemic. The spread of the virus across major European countries is more contained even after recent lockdown measures were lifted, while in the U.S., some states are rolling back reopening measures.

The dollar was on the defensive, particularly against other growth-leveraged currencies such as the Australian dollar, following an uptick in U.S. inflation and news of progress in vaccine development. Sterling, however, underperformed after data showed Britain's economy was recovering more slowly than forecast. The euro has been helped by hopes the European Union could agree at its summit later this week on a rescue financing package that will limit the economic damage to the bloc from the coronavirus pandemic.  The euro's strength helped to push the dollar index to 96.056, one-month low.

14/ 07/ 2020

Worsening Virus Worries, Trade Tension & ECB Meeting in Focus

The dollar edged lower on Monday as investors looked to U.S. corporate earnings and upcoming retail data to gauge whether guarded optimism on the economic outlook was justified. While data suggests second-quarter results will show the second-biggest quarterly drop in corporate earnings since 1968, investors maintain some degree of confidence in the U.S. consumer. Sterling declined against dollar as Britain’s exit from the European Union weighed on investors sentiment. The euro jumped sharply against the dollar, and is likely set for a bumpy ride over the next few days ahead of key developments in the European Union later this week. The strong start to the week for the euro comes as data showed ongoing investor appetite for the single currency.

The euro is likely to face a volatile week, ahead of the European Central Bank's policy meeting on Thursday and an EU summit on Friday. Oil prices slipped on Monday after global coronavirus cases rose by a record daily amount, fanning fears of renewed government lockdowns, and on growing U.S. and European tension with China.

13/ 07/ 2020

Week Ahead | Economic uncertainty continues; Investors eye on vaccine for the virus

The dollar slipped on Friday, as its safe-haven allure diminished, on hopes of a potential vaccine for the novel coronavirus that outweighed concerns about the surge in infections in the United States and around the world.Currency investors may be looking forward to the treatments being developed for the virus. The yen has been trading in a narrow range despite the ebbs and flows of risk sentiment, as one-month implied and historical volatility close to its record low.Technical indicators in the options market are signalling investor concerns about future outbreak in volatility. The Chinese currency has gained almost 1% last week, supported by hopes of capital inflows as share prices rebounded after Beijing indicated it wants a healthy bull market.

Central banks have played an important role in the attempt to stabilize financial markets in the wake of the Covid-19 pandemic. In the upcoming week, the ECB, Bank of Japan and Bank of Canada will make rate announcements. As well, GDP and inflation reports could have an impact on currency moves.

06/ 07/ 2020

Week Ahead | Stats, Geopolitics, and COVID-19 to Drive the Majors

Out of the U.S, it was a busy week on the economic data front. Key stats in the week included consumer confidence, private sector PMIs, the weekly jobless claims, and June’s nonfarm payrolls. The weekly jobless claims were disappointing, however, rising by 1.472m following a 1.482m jump in the previous week.Following the release of the numbers, President Trump was quick to hold a press conference. The focus was on the jump in May and June nonfarm payrolls, consumer confidence, and spending. It was expected and Trump delivered, with the President talking of records and the gains in the U.S equity markets since his election.He also promised more for next year, as the administration looked to claw back some of Biden’s lead.

Out of the UK, the stats were skewed to the negative. Downward revisions to 1st quarter GDP and business investment figures had a muted impact on the Pound, however.In the 1st quarter, the UK economy contracted by 2.2%, revised down from 2.0%. The markets have moved on from the 1st quarter, with a slower pace of contraction in the private sector positive.The all-important services PMI jumped from 29.0 to 47.1, supported by the easing of lockdown measures.While Angela Merkel sounded the alarm bells over Brexit, there was little for the markets to fret about. Risk appetite through the week added to the upside in the Pound.In the week, the Pound rose by 1.19% to $1.2483, reversing a 0.11% fall in the previous week. 

Out of the Eurozone, both the manufacturing sector and service sector PMIs bounced in June, providing the EUR with support. France’s private sector led the way, with both manufacturing and service sector activity expanding. For the week, the EUR rose by 0.26% to $1.1248, following a 0.37% gain from the previous week.

It’s a relatively busy week ahead, while economic data will influence, the latest COVID-19 numbers and rising tension between the U.S and China will likely drive the markets.