SMATS FX Weekly Market Report | Monday 06 July 2020

USD

The USD is starting to struggle as safe havens begin to fall on optimism of an infection slowdown, but the US are showing repeated new records for COVID-19 infections with investors start to trade in anticipation of a second economic rebound as the US remain in wake. Business manufacturing numbers are due out on Monday for the US as analysts expect improvement across the board. A whole host of Fed members will be giving speeches throughout Tuesday which could keep the USD on high alert.

Influences on HKD, SGD & AED

This week the Singapore Dollar is in for a turbulent week with the general election taking place on Friday. It is likely that the People’s Action Party (PAP) will secure their 15^th consecutive term in government since 1959. Hong Kong will be releasing their markit PMI numbers for June on Monday but in a week without much data, it will be down to domestic COVID-19 cases and USD movements for our exotic currencies this week.

AUD

The Aussie Dollar continues to strengthen on the back of positive economic updates and successful efforts to fend off the virus. This week, the Reserve Bank of Australia are making their rate decision, last month they kept rates at 0.25%. Analysts do not expect any changes to policies as the RBA hinted that the economic downturn took less of an impact on the economy than that was expected. Chinese data is likely to impact the Aussie Dollar due to the close trade ties, keep an eye out for the CPI and PPI numbers that are due out during Thursday’s Asian session.

NZD

It was quite a subdued week for the NZD last week which gained slightly on risk sentiment. This week there are some business confidence reports that could swing NZD pairs one way or another. The NZIER business confidence report is likely to improve from -70% to -60% for Q2 of 2020 while the ANZ business confidence report is likely to drop from -33 to -34.4. The Reserve Bank of New Zealand use business sentiment reports when considering their policy announcements.

EUR

Discussions surrounding the EU recovery fund is likely to have the largest impact on the Euro as the Eurozone shows an empty docket of data. Market sentiment is also likely to drive the price of the Euro as safe havens took a slight hit last week. The European Commission proposed that €750 B recovery facility should be enough to make up two-thirds of government grants while the remaining third will be made up of loans. Meetings are set to resume on the 9^th of July and head of states are getting together for another meeting in the middle of July. Europe’s economic forecasts are due out on Wednesday and it should indicate any changes to growth or inflation projections due to the virus.

GBP

In the absence of major economic updates out of the UK, the spotlight will likely be on Brexit negotiations and COVID-19 updates to drive the Pound’s value. Some lower-tier data is going be sprinkled out during the week, the construction PMI is due out on Monday, it is expected to improve from 28.9 to 46.0. In Brexit news, officials of the UK and EU are hopeful for a year-end deadline, but Michel Barnier says that serious divergences remain while negotiations are deadlocked as regulations for business and the fishing industry has caused a standstill in negotiations.