Time | Country | Event | Period | Previous value | Forecast |
---|---|---|---|---|---|
02:00 | New Zealand | RBNZ Interest Rate Decision | 0.25% | 0.25% | |
03:00 | New Zealand | RBNZ Press Conference | |||
05:00 | Japan | Coincident Index | April | 88.8 | 81.5 |
05:00 | Japan | Leading Economic Index | April | 85.1 | 76.2 |
08:00 | Switzerland | Credit Suisse ZEW Survey (Expectations) | June | 31.3 | |
08:00 | Germany | IFO - Current Assessment | June | 78.9 | |
08:00 | Germany | IFO - Expectations | June | 80.1 | |
08:00 | Germany | IFO - Business Climate | June | 79.5 | |
13:00 | Belgium | Business Climate | June | -34.4 | -28 |
13:00 | U.S. | Housing Price Index, m/m | April | 0.1% | |
13:00 | Switzerland | SNB Quarterly Bulletin | |||
14:30 | U.S. | Crude Oil Inventories | June | 1.215 | |
16:30 | U.S. | FOMC Member Charles Evans Speaks | |||
19:00 | U.S. | FOMC Member James Bullard Speaks | |||
22:45 | New Zealand | Trade Balance, mln | May | 1267 |
FXStreet notes that the RBNZ is likely to keep the cash rate on hold at 0.25% and make no changes to the LSAP size (NZD 60 billion). Economists at TD Securities lay out three scenarios and the dovish one could lift the kiwi, which is surging +0.63% to 0.6520 as of writing, towards 0.6545.
“Dovish (30%): RBNZ announces the LSAP has been upsized or indicates this is under consideration. Offshore covid cases are accelerating, this could hit global growth, in turn impacting NZ growth. The high NZD is a constraint on the RBNZ achieving its inflation objectives. Impact of NZ drought worse than initially expected. NZD/USD at 0.6545.”
“Neutral (65%): No major changes. Domestic outcomes have been better than expected but risks are still skewed to the downside. NZD/USD at 0.6475.”
“Hawkish (5%): Bank indicates ‘Risks as evenly balanced’. The Bank removes any mention that the OCR will remain at 0.25% until early 2021 if the Bank is upbeat in other aspects of the statement. It's still too early for the RBNZ to turn hawkish as 2nd wave cases and virus hotspots garner more attention. NZD/USD at 0.6440.”
FXStreet reports that economists at Rabobank believe the US dollar has room to weaken in the next weeks, however, EUR/USD may have already priced in the improvement in global conditions and expect a return to risk-off environment to lead the pair below 1.10 by year-end.
“The value of the USD is likely to fall further if there is additional rotation back into EM assets. However, it could be argued that the risk trade is, or could soon become overvalued, at this point there is likely to be another wave of demand for the safe-haven USD.”
“Although the bounce in asset prices has been achieved with the support of copious amounts of central bank and fiscal support, these policies are unlikely to be able to protect all businesses from the developing demand shock. Already this can be seen in rising unemployment rate and growing savings ratios. Although investors have largely written off Q2 economic data as inevitably appalling, Q3 data still has the capacity to shock.”
“While we see the potential for the USD to weaken further in the weeks ahead if risk appetite stays strong, on a three-to-six month view we see shock for another round of safe-haven buying which could take EUR/USD back below 1.10 before year-end.”
The U.S.
Commerce Department announced on Tuesday that the sales of new single-family
homes climbed 16.6 percent m-o-m to a seasonally adjusted annual rate of 676,
000 units in May.
Economists had
forecast the sales pace of 640,000 last month.
April’s sales
pace was revised down to 580,000 units from the originally reported 623,000
units.
According to
the report, new home sales in the South, the largest area, increased 15.2
percent m-o-m in May, while sales in the Northeast surged 45.5 percent m-o-m, sales
in the West climbed 29.0 percent m-o-m and sales in the Midwest rose 6.4
percent m-o-m.
Preliminary
data released by IHS Markit on Tuesday pointed to a notable slowdown in the rate of contraction
of the U.S. business activity in June, as businesses began to reopen on a
larger scale.
According to
the report, the Markit flash manufacturing purchasing manager's index (PMI)
came in at 49.6 in June, up from 39.8 in May, pointing to only a fractional deterioration
in operating conditions. Economists had expected the reading to increase to 48.
A reading above 50 signals an expansion in activity, while a reading below this
level signals a contraction. According to the report, noticeable softening in
the pace of overall decline largely stemmed from significantly slower drops in
output and new orders. Although still signaling contractions, rates of decrease
were their slowest since before the escalation of the pandemic.
Meanwhile, the
Markit flash services purchasing manager's index (PMI) rose to 46.7 in June from
37.5 in the prior month, pointing
to the weakest contraction in services activities in four months, as increasing
numbers of service providers returned to work. Economists had expected the
reading to rise to 46.5. According to the report, the slower decline in
activity was commonly linked to only a marginal decrease in new orders.
Overall, IHS
Markit Flash U.S. Composite PMI Output Index came in at 46.8 in June, up from 37.0
in May, indicating that the rate of contraction slowed further from April’s record
low. The decline was the softest since February, before the pandemic escalated.
Commenting on
the flash PMI data, Chris Williamson, Chief Business Economist at HIS Markit,
noted: “The flash PMI data showed the US economic downturn abating markedly in
June. The second quarter started with an alarming rate of collapse but output
and jobs are now falling at far more modest rates in both the manufacturing and
service sectors. The improvement will fuel hopes that the economy can return to
growth in the third quarter.”
U.S. stock-index futures rose on Tuesday after the U.S. President Donald Trump reaffirmed that the U.S. trade deal with China was "fully intact", while better-than-expected business activity data from Europe boded well for U.S. PMI reading due later today.
Global Stocks:
Index/commodity | Last | Today's Change, points | Today's Change, % |
Nikkei | 22,549.05 | +111.78 | +0.50% |
Hang Seng | 24,907.34 | +396.00 | +1.62% |
Shanghai | 2,970.62 | +5.35 | +0.18% |
S&P/ASX | 5,954.40 | +9.90 | +0.17% |
FTSE | 6,335.61 | +90.99 | +1.46% |
CAC | 5,035.42 | +86.72 | +1.75% |
DAX | 12,591.45 | +328.48 | +2.68% |
Crude oil | $41.27 | +1.33% | |
Gold | $1,775.90 | +0.54% |
(company / ticker / price / change ($/%) / volume)
3M Co | MMM | 158.01 | 1.32(0.84%) | 1009 |
ALCOA INC. | AA | 12.11 | 0.28(2.37%) | 57543 |
ALTRIA GROUP INC. | MO | 40.6 | 0.55(1.37%) | 9081 |
Amazon.com Inc., NASDAQ | AMZN | 2,732.00 | 18.18(0.67%) | 35906 |
American Express Co | AXP | 101.6 | 2.16(2.17%) | 14106 |
AMERICAN INTERNATIONAL GROUP | AIG | 32.06 | 0.27(0.85%) | 5484 |
Apple Inc. | AAPL | 364.95 | 6.08(1.69%) | 564040 |
AT&T Inc | T | 30.36 | 0.25(0.83%) | 176161 |
Boeing Co | BA | 190.65 | 2.13(1.13%) | 381493 |
Caterpillar Inc | CAT | 127.51 | 1.72(1.37%) | 20700 |
Chevron Corp | CVX | 92.8 | 1.21(1.32%) | 15525 |
Cisco Systems Inc | CSCO | 45.46 | 0.30(0.67%) | 19467 |
Citigroup Inc., NYSE | C | 53.18 | 1.12(2.14%) | 207147 |
E. I. du Pont de Nemours and Co | DD | 54 | 1.02(1.93%) | 1199 |
Exxon Mobil Corp | XOM | 47.28 | 0.86(1.85%) | 74056 |
Facebook, Inc. | FB | 240.5 | 1.28(0.54%) | 95343 |
FedEx Corporation, NYSE | FDX | 139 | 1.62(1.18%) | 6330 |
Ford Motor Co. | F | 6.39 | 0.11(1.75%) | 485630 |
Freeport-McMoRan Copper & Gold Inc., NYSE | FCX | 11.07 | 0.28(2.60%) | 28438 |
General Electric Co | GE | 7.15 | 0.11(1.56%) | 435779 |
General Motors Company, NYSE | GM | 26.96 | 0.59(2.24%) | 39947 |
Goldman Sachs | GS | 207 | 3.58(1.76%) | 6625 |
Google Inc. | GOOG | 1,460.00 | 8.14(0.56%) | 3336 |
Hewlett-Packard Co. | HPQ | 17.15 | 0.22(1.30%) | 23138 |
Home Depot Inc | HD | 252 | 2.84(1.14%) | 4895 |
HONEYWELL INTERNATIONAL INC. | HON | 147 | 2.06(1.42%) | 1365 |
Intel Corp | INTC | 59.95 | -0.14(-0.23%) | 59327 |
International Business Machines Co... | IBM | 122.3 | 1.23(1.02%) | 11983 |
Johnson & Johnson | JNJ | 144.25 | 0.86(0.60%) | 5536 |
JPMorgan Chase and Co | JPM | 98.7 | 1.95(2.02%) | 139840 |
McDonald's Corp | MCD | 189.03 | 1.57(0.84%) | 6722 |
Merck & Co Inc | MRK | 77.4 | 0.65(0.85%) | 3916 |
Microsoft Corp | MSFT | 202.4 | 1.83(0.91%) | 211854 |
Nike | NKE | 101.9 | 2.39(2.40%) | 47465 |
Pfizer Inc | PFE | 33.25 | 0.14(0.42%) | 50888 |
Procter & Gamble Co | PG | 118.1 | 0.35(0.30%) | 17243 |
Starbucks Corporation, NASDAQ | SBUX | 76.5 | 1.10(1.46%) | 28168 |
Tesla Motors, Inc., NASDAQ | TSLA | 998.5 | 4.18(0.42%) | 68199 |
The Coca-Cola Co | KO | 46.27 | 0.53(1.16%) | 38690 |
Twitter, Inc., NYSE | TWTR | 33.89 | 0.42(1.25%) | 30964 |
UnitedHealth Group Inc | UNH | 296 | 3.33(1.14%) | 3376 |
Verizon Communications Inc | VZ | 55.82 | 0.16(0.29%) | 29466 |
Visa | V | 197.75 | 2.79(1.43%) | 2069215 |
Wal-Mart Stores Inc | WMT | 122.98 | 1.30(1.07%) | 74515 |
Walt Disney Co | DIS | 117.68 | 1.76(1.52%) | 38204 |
Yandex N.V., NASDAQ | YNDX | 47.82 | 0.88(1.87%) | 3892 |
Apple (AAPL) target raised to $400 from $325 at UBS
NIKE (NKE) target raised to $113 from $80 at Needham
Starbucks (SBUX) target lowered to $80 from $90 at Telsey Advisory Group
Time | Country | Event | Period | Previous value | Forecast | Actual |
---|---|---|---|---|---|---|
07:15 | France | Services PMI | June | 31.1 | 44.2 | 50.3 |
07:15 | France | Manufacturing PMI | June | 40.6 | 46 | 52.1 |
07:30 | Germany | Services PMI | June | 32.6 | 42 | 45.8 |
07:30 | Germany | Manufacturing PMI | June | 36.6 | 41.5 | 44.6 |
08:00 | Eurozone | Manufacturing PMI | June | 39.4 | 44.5 | 46.9 |
08:00 | Eurozone | Services PMI | June | 30.5 | 41 | 47.3 |
08:30 | United Kingdom | Purchasing Manager Index Manufacturing | June | 40.7 | 45 | 50.1 |
08:30 | United Kingdom | Purchasing Manager Index Services | June | 29.0 | 40 | 47 |
EUR rose against most other major currencies in the European session on Tuesday, helped by better-than-expected PMI readings and improvement in broader market sentiment.
Investors' risk appetite recovered after the White House trade adviser Peter Navarro stated that his earlier remarks that the trade deal with China was “over” were taken "wildly out of context." Meanwhile, the U.S. President Donald Trump reaffirmed that the U.S. trade deal with China was "fully intact". "Hopefully they will continue to live up to the terms of the agreement," said on Twitter. This reduced volatility in markets as well.
The flash data from IHS Markit revealed that Germany's private sector showed further signs of a turnaround following a record downturn in activity earlier in the second quarter. The Flash Germany Composite Output Index jumped to 45.8 in June from 32.3 in the previous month. This was the highest reading in four months and above economists' forecast of 44.2. The survey highlighted the effects of easing lockdown restrictions and also indicated an improvement in business confidence.
Meanwhile, France's private sector activity rose for the first time in four months during June as restrictions related to dealing with the COVID-19 pandemic continued to be lifted. Flash France Composite Output Index increased to 51.3 this month from 32.1 in May. That was above economists' estimate of 46.3.
Overall, the eurozone economic downturn eased markedly for a second successive month in June as lockdowns to prevent the spread of the COVID-19 outbreak were further
relaxed. The flash IHS Markit Eurozone Composite PMI rose to 47.5 in June from 31.9 in May. This was the highest reading in four months and exceeded economists' forecast of 42.4.
Investors also continued to expect the European leaders to reach compromise or agreement on the recovery fund. A spokesperson for the European Union's (EU) Brussels headquarters, Barend Leyts, announced earlier today that the EU heads would meet in Brussels on July 17-18 to discuss the EU recovery plan and long-term budget.
FXStreet reports that Ho Woei Chen, CFA, Economist at UOB Group, assessed the recent monetary policy decision by the PBoC.
“The People’s Bank of China (PBoC) kept its benchmark 1Y Loan Prime Rate (LPR) and the 5Y & above LPR unchanged at 3.85% and 4.65% respectively in June. This is the second consecutive month that PBoC stays put after the larger-than-usual reduction in April and is in line with consensus expectation though we had expected a cut this month.”
“Year-to-date, the 1Y and 5Y & above LPR have moved down by a total of 30 bps and 15 bps, respectively. The largest move came in April when the PBoC cut the 1Y and 5Y & above LPR by 20 bps and 10 bps respectively. The interest rate on 1Y medium-term lending facility (MLF) loans to financial institutions which the LPR is pegged to, stands at 2.95% after 30 bps cut YTD.”
“Last Thursday, the PBoC cut the 14-day reverse repo rate by 20 bps to 2.35%, to realign it with the more widely-used 7-day reverse repo which was cut by 20 bps to 2.20% in March. The 7-day reverse repo rate was kept unchanged last week.”
“With the State Council renewing its commitment to reduce funding costs for firms last Wednesday, we continue to expect the LPR to be lowered gradually while banks’ reserve requirement ratio (RRR) will also be cut further to facilitate the credit expansion and allow banks to absorb the RMB1 trillion of special treasury bonds issuance which is targeted for completion by end-July. The easing inflation will provide more room for monetary easing, we maintain our forecast for 1Y LPR to fall to 3.60% by end-3Q20 and 3.55% by end-4Q20.”
FXStreet reports that economists at Credit Suisse suggest the S&P 500 is expected to extend the consolidation phase beneath the February ‘pandemic gap’ at 3260/3338 while retail sentiment continues to rise though institutional sentiment is approaching levels often seen with a pause.
"The S&P 500 has entered a consolidation/corrective phase as expected just ahead of the 3260/3338 “pandemic gap” from February. Our bias remains for this phase to remain in place for a while yet.
“Immediate resistance remains seen at 3190, above which we see 3233 and then 3260/3338. A close below the 200-day average at 3018 can clear the way for a deeper setback with support then seen at 2955, then 2835 – the 38.2% retracement of the rally from March, which we look to hold.”
“Individual Investor Bull-Bear sentiment extends its rise from levels typically associated with an important low, reinforcing the positive price action we are seeing elsewhere and may be close to moving into positive territory while Financial Advisor Bull-Bear sentiment though is now approaching levels often associated with a market pause, adding weight to our broader consolidation scenario.”
“92% of S&P 500 stocks are still above their 63-day average adding weight to our view the ‘market’ remains overstretched near-term but the number of stocks above their 200-day average recently fell sharply, from over 60% to 42% currently, pointing to a more neutral long-term state.”
FXStreet notes that the coronacrisis has revealed gaps in social welfare, the need for Europe, the role of monetary policy and, in France, the inefficiency of the state. Patrick Artus from Natixis analyzes these topics.
“The COVID crisis has illustrated the big differences between people who enjoy more protection (pensioners, employees on long-term contracts, civil servants) and those who enjoy less (young people, employees on short-term contracts, self-employed and craftsmen, etc.). This demonstrates the gaps in the social safety net, which must, therefore, be extended to those who do not benefit from it.”
“There is a broad consensus that European countries should invest more in the energy transition, industries of the future, research, etc. The additional investment needs related to the energy transition are estimated at 2% of GDP per year. The eurozone has significant excess savings so Europe’s role is clear: it should mobilize these excess savings to finance the necessary additional investment, which is the principle behind the investment fund proposed by the European Commission, which is set to become permanent.”
“In response to the COVID crisis, the eurozone has implemented a highly expansionary fiscal policy. These fiscal deficits have been fully monetized by the ECB. But are the long-term costs of this policy well understood? If it gives rise to asset price bubbles, in particular in real estate, it will have very negative social effects (housing access problems).”
“Despite very high public spending, the French state is not very efficient: the crisis has demonstrated the shortcomings of the healthcare system; those in the education system are clear; the productivity of the French state is low. Given the extent of France’s public investment needs, the French state will have to become more efficient to finance them.”
FXStreet reports that strategists at Credit Suisse look for 10yr US Real Yields to break lower from their sideways range to reinforce the break higher and resumption of the core bull trend in gold for an eventual move to new record highs above $1921.
“With 10yr US Real Yields threatening to break lower we look for Gold to correspondingly break higher from its range above $1765 to confirm a resumption of its core bull trend with resistance seen at $1796/1803 next.”
“Big picture, we continue to eventually look for new highs above $1921, with resistance then seen next at $2000, then $2075/80.”
“Support at $1660 needs to hold to avid a near-term top.”
FXStreet reports that economists at Natixis believe the US dollar can depreciate against EUR due to capital flowing back to emerging markets, financial markets worries about Joe Biden election and greater monetary expansion in the US than in the eurozone.
“A continued return of capital to emerging countries, encouraged by the abundant money creation in the United States and investors' search for returns.”
“Anticipations of Joe Biden being elected, which could discourage investment in the United States in reaction to his programme: higher wages, restrictions on oil and gas production, higher taxation of companies and wealth, capital gains.”
“The fact that the monetary expansion will be much greater than in the eurozone in 2020.”
FXStreet reports that FX Strategists at UOB Group forecast USD/CNH to keep navigating within 7.0500 and 7.1250 in the next weeks.
24-hour view: “USD closed at 7.0595 in NY (-0.26%) but at the time of writing, headlines on USD-China trade sent it soaring. The rapid rise has room to extend further but for today, a move beyond 7.1000 is unlikely. Support is at 7.0690 followed by 7.0600.”
Next 1-3 weeks: “USD traded in a quiet manner for the past few days and there is not much to add to our update from Monday (15 Jun, spot at 7.0880). As highlighted, the current movement in USD is deemed as part of consolidation phase and USD is expected to trade between 7.0500 and 7.1250 for a period.”
Reuters reports that the president of the European Union Chamber of Commerce in China said on Tuesday that he doubts a long-awaited China-EU investment agreement will be finished this year.
Joerg Wuttke told reporters during a briefing that he was disappointed the latest high-level EU-China meetings, which were held on Monday, did not lead to a joint communique, adding that he was concerned China is drifting towards isolation.
"The fact that both parties didn't feel like reporting what has been agreed upon is an indicator that there was very little to agree upon," said Wuttke.
"I don't see any conclusion this year."
The 27-nation EU and China have both said they hope to conclude negotiations on the Comprehensive Agreement on Investment in 2020, after six years of talks.
EU officials say they want to see movement in areas such as autos, biotech and micro-electronics and see Beijing limit subsidies for state-run companies.
Meeting halfway with Chinese negotiators is impossible as Europe is already far more open than China, said Wuttke.
Speaking after video calls with Chinese Premier Li Keqiang and President Xi Jinping, European Commission President Ursula von der Leyen said the Chinese needed to be more ambitious.
She also warned of "very negative consequences" if Beijing goes ahead with a new security law on Hong Kong that the West says will curtail basic rights.
Premier Li said on Monday that cooperation with the European Union outweighs competition, and China hopes the EU could relax export control measures against China.
FXStreet reports that EUR/USD has moved higher over the last month, trades near the 1.13 level, as global risk sentiment has improved and economists at Danske Bank see the pair at 1.15 on a one-to-three month horizon.
“The potential for a stronger EUR/USD is highly linked to the possibility of an uptick in global manufacturing and US inflation. We view the Fed as being supportive of such inflationary policies, at least short term. However, do note we suggest watching the financial canaries: if DAX, autos, banks or a host of EM currencies enter a correction, EUR/USD will quite likely also move lower.”
“We set EUR/USD at 1.15 in one-to-three months and but we are generally (still) negative on EUR/USD and forecast 1.11 in six-to-twelve months.”
Trade would only need to grow 2.5% per quarter to reach optimistic scenario
Rapid government aid helped to avoid worst-case downturn in trade
Sees trade growth in 2021 more in the range of 5% to 20%
According to the report from IHS Markit / CIPS, June data indicated a vastly improved overall picture across the UK private sector, with the downturn in total business activity continuing to steady after the record rate of decline seen at the height of the lockdown during April. Another drop in service sector activity contrasted with a return to production growth among manufacturing companies in June.
The headline seasonally adjusted Flash UK Composite Output Index - which is based on approximately 85% of usual monthly replies – rose to 47.6 in June, from 30.0 in May. The latest reading was below the 50.0 no-change threshold, but signalled the slowest pace of decline since the start of the downturn in March.
Looking at the month-on-month change in the headline index, the rise since May (+17.6 points) was the largest since the start of the series in January 1998, which highlighted a decisive shift in momentum. At the same time, private sector firms also signalled a rebound in business expectations for the year ahead, with confidence reaching a four-month high in June.
Survey respondents mainly noted that the easing of restrictions related to the coronavirus disease 2019 (COVID-19) pandemic had a favourable impact on economic activity, with business operations gradually resuming in a number of sectors and staff brought back from furlough. However, there were also widespread reports that underlying demand remained very subdued and cutbacks to client spending had acted as continued drag on overall business activity.
The seasonally adjusted Flash UK Manufacturing PMI – a composite single-figure indicator of manufacturing performance – posted 50.1 in June, up from 40.7 in May and fractionally above the neutral 50.0 value. Moreover, the manufacturing output index also moved back into growth territory (50.8), which ended ending a three-month period of decline.
June data indicated a much slower reduction in service sector activity than that seen in the previous month. This was highlighted by a rise in the seasonally adjusted IFlash UK Services PMI to 47.0, up from 29.0 in May. The latest reading signalled the slowest pace of decline in service sector output since the start of the downturn in March.
According to the report from IHS Markit, the eurozone economic downturn eased markedly for a second successive month in June as lockdowns to prevent the spread of the coronavirus disease 2019 (COVID-19) outbreak were further relaxed. The month also saw a continued strong improvement in business expectations for the year ahead.
The flash Eurozone Composite PMI rose further from an all-time low of 13.6 seen back in April, surging to 47.5 in June from 31.9 in May. The 15.6-point rise was by far the largest in the survey history with the exception of May’s record increase. The latest gain took the PMI to its highest since February, though still indicated an overall decline in business output.
Output fell again in both manufacturing and services, the latter showing the slightly steeper rate of decline. Both sectors nevertheless reported markedly reduced rates of contraction for a second month running. The ongoing downturn in output was linked to a fourth consecutive monthly deterioration of inflows of new business, which in turn contributed to a further steep decline in backlogs of orders for companies to work through. However, rates of decline of both new orders and order book backlogs moderated considerably during the month. For those companies continuing to report falling output and order books, the pandemic was again by far the most commonly cited cause.
The relaxation of some lockdown measures, and planned further easing in coming months, also helped propel business sentiment for the coming year to its highest since February. The number of optimists exceeded pessimists for the first time in four months. Sentiment improved markedly in both manufacturing and services, resulting in the second-largest rise in the output expectations index since comparable data were first available in 2012.
According to the report from IHS Markit, June’s flash PMI data pointed to further signs of a turnaround in the German economy following a record downturn in activity earlier in the second quarter.
At 45.8, the headline Germany Composite Output Index was up sharply from May’s 32.3 and the highest in four months, with the survey highlighting the effects of easing lockdown restrictions and also indicating an improvement in business confidence.
Latest data showed business activity edging closer to stabilisation, down to the smallest extent by far since start of the coronavirus disease 2019 (COVID19) outbreak in March. Results at the sector level showed identical rates of decline in services business activity and manufacturing production. Where activity fell since May, there were reports of coronavirus-related uncertainty continuing to weigh on demand and leading to contract postponements or cancellations. That said, there were growing reports of businesses resuming operations, with some firms also noting pent-up demand. As such, the latest decline in new orders was the shallowest in the current four month sequence. New export business also showed signs of steadying, though the rate of decline remained faster than that of total new orders.
Business expectations turned positive for the first time in four months in June. The improvement reflected renewed optimism in both monitored sectors, with service providers slightly more positive about the outlook than their manufacturing counterparts. That said, in both cases sentiment remained subdued by historical standards.
Lastly, June saw the Flash Germany Manufacturing PMI register a three-month high of 44.6, up from May’s 36.6 and representing a sustained recovery from an 11-year low in April. There was upward pressure on the index from slower falls in new orders, output and employment. However, its rise was stymied by a faster drop in stocks of purchases and – more notably – a stabilisation of supplier delivery times, following the recent COVID-19-related supply chain disruption.
The Australian dollar and other risk-sensitive currencies recovered after White house trade adviser Peter Navarro said his comments that the trade deal with China was "over" were taken out of context.
US President Donald Trump also said that the first phase of the trade deal signed with China in January remains fully in force. This eased market fears that Washington might abandon the agreement.
The World health organization reported on Sunday a record increase in the number of cases of coronavirus infection in the world. In 24 hours, 183,020 new cases were recorded.
Volatility in currency markets is increasing amid hopes of lifting quarantine measures in many parts of the world, on the one hand, and signs of an increase in the number of coronavirus cases in the US, on the other.
The market focuses on data on business activity in Europe, where some countries began easing restrictions at the end of April. Market participants will be waiting for signals about the pace of economic recovery. Economists expect the Euro zone composite PMI to rise to 42.4 in June from 31.9 in may, amid a gradual recovery in European economies.
FXStreet reports that USD/CNY remains under pressure as is ready to break the below the key 7.0557 support which would represent a price top on a closing basis, per Credit Suisse.
“USD/CNY is under pressure in the near-term and this leaves the market crucially poised above key support at 7.0557/0470 – the late April and current June lows, 38.2% retracement of the rally from January and the 200-day average.”
“With daily RSI momentum already holding a top and weekly MACD momentum now also turning lower, the 7.0557/0470 support is seen at risk and a closing break would see a price top established to warn of a more important move lower, with support then seen next at 7.0301, ahead of 7.0092 and then the medium-term uptrend from the 2018 low and 61.8% retracement at 6.9793/9690.”
Reuters reports that Britain’s car industry called on the government to introduce additional measures such as a sales tax cut to boost the sector as a third of automotive workers remain furloughed due to the coronavirus outbreak.
Factories closed in March as a lockdown was enforced to contain the spread of the pandemic with some still shut and many operating at a much reduced output, setting the industry up for the lowest level of production in decades.
Car and van volumes are expected to fall by a third to 920,000 units this year and up to one in six jobs are at risk, the Society of Motor Manufacturers and Traders (SMMT) industry body said.
The government has introduced a series of policies to support the economy including a furlough scheme which sees it pay 80% of salaries, up to 2,500 pounds ($3,120) per month, for staff who are placed on temporary leave.
“Government’s intervention has been unprecedented,” said SMMT Chief Executive Mike Hawes.
“But the job isn’t done yet. Just as we have seen in other countries, we need a package of support to restart, to build demand, volumes and growth,” he said, calling for measures to boost consumer confidence and unfettered access to emergency funding.
The sector, Britain’s biggest exporter of goods, is also worried that trading terms with the European Union could worsen after a Brexit transition period finishes at the end of 2020.
“A ‘no deal’ scenario would severely damage these prospects and could see volumes falling below 850,000 by 2025 – the lowest level since 1953,” the SMMT said.
The government has promised to support business throughout the coronavirus crisis and talks are ongoing between London and Brussels to secure a trade agreement with the EU to come into force from Jan 1.
Bloomberg reports that U.S. President Donald Trump said the phase one trade deal with China is “fully intact,” after his adviser Peter Navarro sowed confusion and spurred a temporary stock slump with comments interpreted as a decision to end the agreement.
“The China Trade Deal is fully intact. Hopefully they will continue to live up to the terms of the Agreement!” Trump said in a Twitter post late Monday.
White House trade advisor Peter Navarro had responded to a long question by Fox News interviewer Martha MacCallum asking whether aspects of the deal were “over” by saying: “It’s over. Yes.”
FXStreet reports that FX Strategists at UOB Group still expect EUR/USD to navigate within a consolidative theme in the next weeks.
24-hour view: “Our view for “another dip before stabilization can be expected” was incorrect as EUR staged a surprisingly robust rebound and took out a few strong resistance levels with ease (EUR closed +0.74% higher, the biggest 1-day gain since early June). While the rapid rebound appears to be running ahead of itself, there is room for EUR to edge above 1.1300. For today, the next resistance at 1.1330 is unlikely to come into the picture. Support is at 1.1250 followed by 1.1220.”
Next 1-3 weeks: “Despite the relatively sharp pull-back in EUR last week, we highlighted that “downward pressure has ticked up but EUR is still likely in a 1.1170/1.1380 consolidation range” and added, EUR “has to close below 1.1170 before a deeper pull-back can be expected”. That said, the sudden and sharp rebound yesterday was not exactly expected. Downward pressure has more or less dissipated and from here, EUR is expected to consolidate and trade between 1.1170 and 1.1380 for a period.”
EUR/USD
Resistance levels (open interest**, contracts)
$1.1348 (2145)
$1.1324 (1286)
$1.1307 (1176)
Price at time of writing this review: $1.1265
Support levels (open interest**, contracts):
$1.1234 (2088)
$1.1208 (589)
$1.1175 (661)
Comments:
- Overall open interest on the CALL options and PUT options with the expiration date July, 2 is 51312 contracts (according to data from June, 22) with the maximum number of contracts with strike price $1,1700 (2279);
GBP/USD
Resistance levels (open interest**, contracts)
$1.2710 (1501)
$1.2629 (563)
$1.2566 (498)
Price at time of writing this review: $1.2454
Support levels (open interest**, contracts):
$1.2412 (880)
$1.2385 (1413)
$1.2353 (656)
Comments:
- Overall open interest on the CALL options with the expiration date July, 2 is 15170 contracts, with the maximum number of contracts with strike price $1,2800 (1692);
- Overall open interest on the PUT options with the expiration date July, 2 is 18342 contracts, with the maximum number of contracts with strike price $1,2550 (1487);
- The ratio of PUT/CALL was 1.21 versus 1.21 from the previous trading day according to data from June, 22
* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.
** - Open interest takes into account the total number of option contracts that are open at the moment.
Raw materials | Closed | Change, % |
---|---|---|
Brent | 42.95 | 2.04 |
Silver | 17.68 | 0.63 |
Gold | 1754.476 | 0.66 |
Palladium | 1934.62 | 1.77 |
Index | Change, points | Closed | Change, % |
---|---|---|---|
NIKKEI 225 | -52.29 | 22426.5 | -0.23 |
Hang Seng | -132.55 | 24511.34 | -0.54 |
KOSPI | -14.59 | 2126.73 | -0.68 |
ASX 200 | 1.9 | 5944.5 | 0.03 |
FTSE 100 | -47.98 | 6244.62 | -0.76 |
DAX | -67.79 | 12262.97 | -0.55 |
CAC 40 | -30.75 | 4948.7 | -0.62 |
Dow Jones | 153.5 | 26024.96 | 0.59 |
S&P 500 | 20.12 | 3117.86 | 0.65 |
NASDAQ Composite | 110.35 | 10056.47 | 1.11 |
Time | Country | Event | Period | Previous value | Forecast |
---|---|---|---|---|---|
00:30 | Japan | Nikkei Services PMI | June | 26.5 | |
00:30 | Japan | Manufacturing PMI | June | 38.4 | |
07:15 | France | Services PMI | June | 31.1 | 45.2 |
07:15 | France | Manufacturing PMI | June | 40.6 | 46 |
07:30 | Germany | Services PMI | June | 32.6 | 41.1 |
07:30 | Germany | Manufacturing PMI | June | 36.6 | 41 |
08:00 | Eurozone | Manufacturing PMI | June | 39.4 | 43.8 |
08:00 | Eurozone | Services PMI | June | 30.5 | 40.5 |
08:30 | United Kingdom | Purchasing Manager Index Manufacturing | June | 40.7 | 45.3 |
08:30 | United Kingdom | Purchasing Manager Index Services | June | 29.0 | 39.5 |
13:45 | U.S. | Manufacturing PMI | June | 39.8 | 44 |
13:45 | U.S. | Services PMI | June | 37.5 | 43.7 |
14:00 | U.S. | Richmond Fed Manufacturing Index | June | -27 | |
14:00 | U.S. | New Home Sales | May | 0.623 | 0.634 |
Pare | Closed | Change, % |
---|---|---|
AUDUSD | 0.69093 | 1.16 |
EURJPY | 120.397 | 0.81 |
EURUSD | 1.12613 | 0.75 |
GBPJPY | 133.278 | 1.01 |
GBPUSD | 1.24663 | 0.95 |
NZDUSD | 0.64788 | 1.2 |
USDCAD | 1.35205 | -0.62 |
USDCHF | 0.94714 | -0.5 |
USDJPY | 106.898 | 0.05 |
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