SMATS FX Weekly Market Report | Monday 20 July 2020

USD

The USD had a mixed week last week as COVID-19 cases continue to soar within the US and an improvement in the economy led the USD to a turbulent week last week. A handful of medium tier data reports are due out of the United States this week, with the flash PMI numbers all expected to improve past the 50.0 inflection point, the USD could gain when the data is released on Friday afternoon. Risk sentiment and COVID cases are likely to the other main driver of the Dollar this week.

Influences on HKD, SGD & AED

The Hong Kong unemployment rate for June checked in at 6.3% on Monday morning, but the HKD remained relatively unchanged. On Tuesday, the Hong Kong inflation report is being released, the headline figure has been forecast to check in at 1.7%. The SGD has remained relatively stagnant in the last few weeks, but the inflation reports that are due out on Thursday could shake things up. The USD is likely to continue to be the driver for our exotic currencies this week along with domestic COVID-19 cases.

AUD

Positive global sentiment saw the Aussie Dollar rally in the first half of the week but rising fears of a second wave of COVID-19 caused the AUD to suffer towards the end of the week. This week, the Reserve Bank of Australia will be releasing their meeting minutes on Tuesday after they kept rates at 0.25% earlier in the month. With the prospect of harsher lockdown measures, traders should watch for signs that RBA members are turning more dovish. Flash PMI numbers are expected to rise this week however, the release should not have too much of an impact on the rates. 

NZD

A disappointing inflation update out of New Zealand along with a broader risk sentiment caused the NZD to end the week in the red. This week the NZD will likely be taking its cues from counter-currency action and risk sentiment in the absence of any market moving reports. The sole release out of New Zealand this week will be June’s trade balance data which has been forecast to fall from NZ$ 1.25 B to NZ$1.2 B. On Tuesday, the global dairy trade price index has been forecast to fall, this should have an impact on New Zealand’s economy due to the export prices of their dairy but normally does not move NZD pairs too much.

EUR

The Euro had a stellar week last week gaining against all major currencies after hopes of a recovery fund agreement and positive economic updates sent the European currency to the top of the forex pile. August’s GFK consumer confidence report for August is due out on Thursday, it has been forecast to improve from -9.6 to -4.0. Flash PMI reports are due out on Friday and all three reports are expected to rise above the crucial 50.0 mark, which means the industry will be expanding rather than contracting in the relevant sectors. Traders should pay attention to a host of speeches from European Central Bank members throughout the week as they could give hints as to how the recovery fund is progressing.

GBP

The British Pound took a beating last week after concerns from the Bank of England regarding the current job outlook and weaker-than-expected data also dampened the Pound’s gains from the previous week. The Pound will be hoping to turn things around with the release of their GFK consumer confidence for July expected to improve from -30 to -26. Retail sales numbers are also likely to increase by 7.4% for June which could see an intraday impact on the GBP.