Collinson FX: July 9, 2020 - Plummeting mortality rates, calms the fear
by Collinson FX 9 Jul 2020 12:57 BST
9 July 2020
Club Marine Winter Series - Waitemata Harbour - June 27, 2020 © Richard Gladwell / Sail-World.com
Collinson FX: July 9, 2020 - Plummeting mortality rates, calms the fear
US Coronavirus blew through 3 million infections and worry certain segments of the market. European markets lost ground, worried about the fallout on the global economy and the threat to the re-opening. The US completed their formal withdrawal from the WHO, while the WHO warned that the virus may be an airborne transmission, contradicting previous advice. The IMF sent out a warning that global debt may need re-structuring, as global deficit and debt surges, signalling where the origin of the next economic crises? The US Dollar was softer, with the EUR trading 1.1330, while the GBP broke back above 1.2600!
The China situation is simmering, as their aggressive muscle-flexing in the region, attracts a more unified response. The US, UK , Australia and other European nations look set to stand up with various sanctions on China, to deter their behaviour. This is where Geo-Political tensions are on the rise and could easily spill into the trading markets, disrupting the supply chain. The flagging reserve allowed the commodity currencies to post further gains, with the AUD trading 0.6975, while the NZD pushed up above 0.6560.
The pandemic remains the focus of markets and the sheer numbers are disturbing, but plummeting mortality rates, calms the fear. The real concern is trade and perhaps the mounting global deficits and debt, although the pressure remains low, while interest rates are held at historical lows.
Collinson FX: July 8, 2020 - Economy suffers the worst economic contraction since the Great Depression
Surging global equity markets took a breather overnight, as consideration was given to the virus outbreaks in the Southern States of the USA and a flare up in Melbourne. The viral out-breaks are starting to impact the economies, as the authorities start to re-impose restrictions, as seen in Melbourne. Melbourne has seen a big flare up and has since put the Melbourne Metro area into another 6 week lockdown. The economic impact could be dramatic, for already fragile small business?
The GBP continued to post gains, trading 1.2550, while the EUR fell below 1.1300, following a less than impressive German Industrial Production number. The RBA left rates unchanged and warned of an uncertain future, as the economy is suffering the worst economic contraction since the Great Depression. The AUD was slightly softer, trading 0.6950, while the NZD clings to 0.6550. NZ Business Confidence was in the doldrums, contracting minus 63, but was a slight improvement on the devastatingly low number the previous month. Dairy prices continue to hold up reasonably well, which is a tenuous life-line, but these commodity currencies remain vulnerable.
The Chinese Geo-Political actions may well translate into global reactions which will impact the existing global supply chain. This would have a dramatic effect on commodity currencies.
Collinson FX: July 7, 2020 - NASQAQ hitting new record highs
Global markets surged to welcome the new week, despite large increases in the spread of the coronavirus, in the Southern US States. Chinese stock markets rallied over 5%, while Europe followed the trend, with economic data confirming strong results, as global economies reopen. The US followed suit, with the tech-heavy NASQAQ hitting new record highs, following last weeks massive gains and historically high labour market numbers. The US Non-Manufacturing PMI spiked up to 57.1, confirming the ‘V-shaped’ recovery. The Dollar continued to ease, with the EUR regaining 1.1300, while the GBP approaches 1.2500.
The trade exposed commodity currencies were also boosted by the strong gains in China, pushing the AUD up to 0.6970, while the NZD hit 0.6550. The local markets await the important RBA decision, although no rate moves are expected, the commentary and intentions remain an important market indicator. Australian job advertisements jumped 42%, reflecting the stronger economy and tighter labour market, due to attractive welfare support payments.
The commodity currencies are currently beneficiaries of the easing reserve, as market confidence surges, but remain vulnerable to the Chinese Geo-Political aggression and the global consequences.
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