23/ 06/ 2020

June Prelim Private Sector PMIs to Drive the Majors

The euro gained against on Monday as investors shrugged off worries that rising coronavirus infections in parts of Europe and the United States over the weekend could scupper a quick economic rebound. Torn between record stimulus and growing fears of a second wave of infections, stocks have been moving sideways in recent weeks after rising more than 40% from March lows on hopes the worst of the pandemic was over.

Sterling rose against dollar, recovering from a three-week low during Asian trading, helped by a weaker dollar, hopes of a Brexit trade deal and expectations of better economic data. Britain has until the end of the year to sign a new trade agreement with the European Union, when a transition period following its exit from the bloc comes to an end. Although much remains to be discussed, both parties have signaled progress The dollar dipped against the Japanese yen as investors edged into perceived safe-haven assets after the World Health Organization reported a record global increase in COVID-19 cases. New U.S. cases on Saturday hit the highest since early May, while the WHO reported on Sunday total cases rose by 183,020 in a 24-hour period. Fears of a second wave have also spurred safe-haven demand.

It’s a busy day ahead on the Eurozone economic calendar. Key stats include June’s prelim private sector PMIs from France, Germany, and the Eurozone. The markets will be looking for a bounce from May levels to support a speedier than expected economic recovery, fueled by fiscal and monetary support. While the headline figures will be key, we can expect the services PMIs to be the key driver. Expect employment and new business to garner plenty of attention.

21/ 06/ 2020

Week Ahead | COVID-19 Numbers, Geopolitics and June PMIs in Focus

Fears of a second wave of coronavirus infections have increased demand for safe-haven assets, driving the U.S. dollar on Friday to its best weekly gain in a month. Markets this week have been focused on an uptick in coronavirus cases in many U.S. states, as well as new infections detected in Beijing, raising fears of a return to global lockdowns. The world’s reserve currency, which made small advances in the North American session, gained 0.54% this week against a basket of currencies, its best performance since mid-May.

“With COVID-19 and how it relates to the economy, we know that this thing is not going to go away and we’re going to have to learn how to cope with this. So with that comes a bit of risk in the market was stated by a senior foreign exchange analyst.

The euro was slightly weaker, down, after an EU summit, in which the bloc will seek to bridge regional divisions over a 750 billion euro coronavirus recovery fund, got underway. European Central Bank head Christine Lagarde told EU leaders that their economy was in a “dramatic fall” and called on the bloc to act to spearhead revival, diplomatic sources and officials said. Sweden, Denmark, Austria and the Netherlands - the bloc’s so-called “frugal four” - say the proposed recovery fund is too big and the allocation of money not sufficiently linked to the pandemic.

It’s a big week ahead, with June’s prelim PMIs due out. We can expect COVID-19 and stimulus to also influence.

16/ 06/ 2020

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

The euro rebounded against dollar on Monday  after the Federal Reserve widened its program of buying corporate debt. The Fed and other major central banks have sparked a rapid recovery in equity markets from a steep plunge in March by enacting a number of fiscal and economic stimulus programs, but investors have been uncertain about the economic recovery. 

It’s a busy day ahead as the markets respond to the FED’s Monday announcement. Expect UK stats and FED Chair Powell testimony to draw interest.

15/ 06/ 2020

Week Ahead | Central Banks, Economic Data, COVID-19, and Brexit in Focus

Global economic conditions remain severe, as the Covid-19 pandemic continues to weigh heavily on the major economies, which are reporting declines in economic growth. With no end in sight to the virus, the economic misery is expected to continue for some time yet.

The second wave of coronavirus pandemic had finally become a main theme in the markets last week. Or, investors could have just waited for Fed to confirm its done with more easing for moment, and started profit taking. Either way, massive selloff was seen in the stock markets towards the end of the week. In the currency markets, Yen and Swiss Franc ended as overwhelmingly the strongest, followed by Dollar and Euro. Australian Dollar was the worst performing, and led commodity currencies and Sterling lower.

It’s a busy week ahead. Brexit talks, the BoE and FED Chair Powell Testimony may ultimately overshadow the stats,