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Market Update: Dark Times Ahead With Weak US Q2 Data Forecast; Multiple Countries Re-Locking To Stop Second Pandemic Outbreak

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Image from: Market Review

(29 June 2020)

This Tuesday marks the end of 2020’s second quarter. The market had seen tumulous times as US-China trade tension and Trump vs Biden’s next election got overshadowed by the Global Coronavirus Pandemic. USD, EUR, GBP, AUD and JPY fluctuates while XAU rose steadily.

Investors are hoping for a better 3rd quarter as the Coronavirus pandemic weakens. Lots of impactful data reports are coming out this week for investors to adjust their third-quarter strategy… such as the US Non-Farm Payroll, Jobless Claims, FOMC Meeting Minutes, Australia Retail Sales, and Euro zones multiple PMI data.

 

USD

Investors are waiting for the US to release their consumer confidence, non-farm payrolls report, initial jobless claims and ISM manufacturing PMI data, and FOMC’s meeting minutes. USD had been bearish since its spike in early March, due to weakening US economy and global trade recovery. Its slight recovery last week quickly retracted down this morning.

  1. Increased coronavirus cases in California, Arizona and Texas could be a slight boost to the risk aversion USD

  2. US Federal Bank’s chairman Jerome Powell’s sobering assessment on US economic outlook could boost risk aversion and USD

  3. Thursday’s multiple impactful reports will bring big movements into the market

This week’s event:

  • Mon – Pending Homes Sales

  • Tue – Consumer Confidence

  • Wed – ADP Nonfarm Employment, ISM Manufacturing PMI, Crude Oil Inventories, FOMC Meeting Minutes

  • Thu – Initial Jobless Claims, Nonfarm Payrolls, Unemployment Rate


GBP

After last Friday’s crash, Pound is seeing some recovery this morning as Prime Minister Boris Johnson stated to increase spending to revive the economy.  Johnson is expected to unveil the spending plans on Tuesday, he also eases the social distancing measures from 2-meter to 1-meter.

Quoting Bloomberg News: “Prime Minister Boris Johnson vowed the U.K. will spend large sums on hospitals, schools and roads to jump-start the economy as it emerges from the coronavirus lockdown that has plunged the country into what may be the worst recession in three centuries.”

 This week’s event:

  • Tue – GDP

  • Wed – Manufacturing PMI

  • Fri – Composite PMI, Services PMI




AUD

Due to its risk-sensitive nature, this commodity currency’s recovery last week will be wiped out by these bearish signs below:

  1. New Coronavirus outbreak in Victoria, the second-most populous state in Australia. Containment effort may dampen previous gains from economic activity re-opening

  2. Tension between Australia and its largest trade partner – China can be seen from the extra tariff imposed on local agriculturalproducts and warning of Chinese citizens on travelling to Australia due to “racist incidents”

This week’s event:

  • Thu – Retail Sales



EUR

Market’s forecast on Euro is mixed due to the coming week marks the start of a new month, a new quarter and a new half-year, when investors are expected to rebalance their strategy. Several important data reports will be releasing this week as well for the Euro zones.

  1. Euro making gains as multiple countries is easing down on their lockdown policy. Borders opening to all countries except US, China, Brazil and India.

  2. US-EU trade dispute could impact Euro as well, US had imposed duties on multiple EU imported items.

This week’s event:

  • Tue – CPI

  • Wed – German Manufacturing PMI, German Unemployment Change



GOLD, XAU

Uncertain global trade activities and the resurgence of Coronavirus outbreaks continue to inhibit investor’s risk sentiment, Gold has replaced other investment products as a defensive investment, pushing gold into a rally and selling off on other investment products.

 

Market Watch

USD Dollar Index (DXY) declined to 97.25 from last week’s highest of 97.40

USD/CNY recovered to 7.0758 from last week’s lowest of 7.0514

USD/JPY recovered to 107.113 from last week’s lowest of 106.074

EUR/USD recovered to 1.12542 from last week’s lowest of 1.11904

AUD/USD recovered to 0.68783 from last week’s lowest of 0.68406

GBP/USD recovered to 1.23740 from last week’s lowest of 1.23143

XAU/USD shot to 1772.231 from last week’s lowest of 1747.572

Data from Tradingview.com

 

Sources:  

<https://www.forex.com/en/market-analysis/latest-research/weekly-update/>
<http://forex.cnfol.com/jingjiyaowen/20200629/28239677.shtml >
<http://forex.cnfol.com/jingjiyaowen/20200629/28239988.shtml >
<https://www.bnnbloomberg.ca/boris-johnson-vows-heavy-spending-on-economy-rejects-austerity-1.1457623>
<https://www.dailyfx.com/forex/fundamental/forecast/weekly/aud/2020/06/26/Australian-Dollar-Outlook-Bearish-as-Coronavirus-Cases-Spike.html>
<https://www.dailyfx.com/forex/fundamental/forecast/weekly/eur/2020/06/27/Euro-Forecast-Choppy-Trading-Likely-in-EURUSD-on-Quarter-End-Flows.html>
<https://www.dailyfx.com/forex/fundamental/forecast/weekly/chf/2020/06/27/Gold-Price-May-Ride-the-Tailwind-of-Virus-Uncertainty-Soft-US-Dollar.html>
< https://www.investing.com/economic-calendar/>

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