SMATS FX Weekly Market Report | Monday 15 June 2020

USD

The US Dollar strengthened throughout last week on the back of a turn in global risk sentiment. With COVID-19 cases on the rise in the US again, the Federal Reserve had some negative tones regarding the economic outlook. This week, the USD will mostly be driven by global risk sentiment and counter-currency action. The May retail sales numbers are expected to show an improvement of 7.5% when it is released on Tuesday, but it could have a subdued impact thanks to the ongoing trade war with China and current global economic fears.

Influences on HKD, SGD & AED

Singapore’s unemployment rate came in just at expectations of 2.4% for the 1^st quarter of the year which is their highest jobless rate since the 3^rd quarter of 2009. The SGD has been fairing quite well all things considered but it will be relying on Dollar strength to make any big moves this week in the absence of any other data reports. The United Arab Emirates will be releasing their inflation report for May, it looks like that it will read -3.0% YoY. The unemployment rate for Hong Kong is due out on Tuesday, it is likely to drop to 5.0% from 5.2%.

AUD

Rising Coronavirus fears and a poor global outlook from the Federal Reserved shifted global risk sentiment and put the Aussie Dollar at the bottom of the forex pile last week. This week there are plenty of catalysts that could move AUD pairs, with China sending out a bunch of top-tier reports and Australia’s jobs data on Thursday, we can expect a volatile week for the Aussie. Analysts expect to see the unemployment rate increase from 6.2% to 6.7% in May with a net loss of 75 000 jobs. The Reserve Bank of Australia will be releasing their meeting minutes on Tuesday, and this should give a good look as to how the Reserve Bank are looking to supplement the weakened Australian economy.

NZD

The NZD continued to ride the wave of risk sentiment last week which saw it end in the dark red last week. Fortunately, there are a couple of catalysts this week to turn things around for the Kiwi Dollar. Wednesday sees the release of the quarterly GDP numbers for the first quarter of the year, analysts expect to see the economy fell by 1% in the 1^st quarter of the year. With New Zealand officially Coronavirus-free, they look to be ahead of the curve in terms of their economy reopening.

EUR

The Euro gained throughout last week as traders moved their attention to the shift in global risk sentiment and hints of the European economy re-opening very soon. The ZEW Economic Sentiment Index is due out of Germany on Tuesday, it is likely to have improved from 51.0 to 55.0 which shows the optimism in the biggest economy in Europe. The Eurozone balance of trade for April is due out on Monday, it has been forecast to decline from €28.2 B to €16.2 B. Thursday sees the European Central Bank Economic Bulletin, which could shed some light regarding the ECB’s plan to re-open the economy.

GBP

After a good to the week the Pound Sterling saw its gains eradicated thanks to a shift in global risk sentiment that was sparked by updated negative economic outlooks and a fear that Coronavirus cases are on their way back up. The British Pound also took a hit from uncertainty surrounding Brexit negotiations. This week, we have the UK employment data, the May claimant count is likely to increase by 370 000 after gaining 856 500 while the unemployment rate is likely to climb from 3.9% to 4.7% when it is released on Tuesday. On Thursday, the Bank of England will be making their rate decision, but it is largely expected that they maintain interest rates at 0.1%. On Wednesday, the UK will be releasing their inflation reports and the headline CPI is expected to fall from 0.8% to 0.5% in May.

China

With a whole host of data out of China this week, the AUD and NZD pairs should be lively despite the ongoing trade spat with Australia. On Monday, it is expected that the retail sales for May could ease from -7.5% to -2.5% while the unemployment rate is likely to improve slightly from 6.0% to 5.9%. More signs that the Chinese economy is well on its way to recovery is the industrial production climb from 3.9% to 4.4%. The fixed asset investment is also expected to improve from -10.3% to -6.2% for May.