It's a busy day ahead as the markets respond to the FED's Monday announcement. Expect UK stats and FED Chair Powell testimony to draw interest.
It was a busy start to the day on the economic calendar this morning. The Aussie Dollar and Kiwi Dollar were in action early on, with the Bank of Japan and Japanese Yen in focus later this morning.
In spite of the busy start to the day, the economic calendar took a back seat as the markets reacted to the FED move on Monday. The FED’s announcement to buy individual corporate bonds led to a Monday rebound in the U.S equity markets. This continued through the early part of the Asian session, which also supported the Aussie and Kiwi Dollar.
Looking at the latest coronavirus numbers.
On Monday, the number of new coronavirus cases rose by 115,910 to 8,100,342. On Sunday, the number of new cases had risen by 124,839. The daily increase was lower than Sunday’s rise while up from 102,703 new cases from the previous Monday.
Germany, Italy, and Spain reported 855 new cases on Monday, which was down from 909 new cases on Sunday. On the previous Monday, 783 new cases had been reported.
From the U.S, the total number of cases rose by 19,412 to 2,181,556 on Monday. On Sunday, the total number of cases had risen by 19,920. On Monday, 8th June, a total of 18,206 new cases had been reported.
Consumer sentiment weakened in the 2nd quarter, with the Westpac consumer sentiment index falling from 104.2 to 97.2. The downside was attributed to the impact of the COVID-19 pandemic on the economy. In the 1st quarter, the Index had fallen from 109.9 to 104.2.
According to the latest Westpac report,
Looking at the sub-indexes, the declines were considered modest, though an expected rise in unemployment could lead to heavier losses.
The Kiwi Dollar moved from $0.64737 to $0.64676 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.12% to $0.6482.
House prices rose by 1.6% in the 1st quarter, following a 3.9% increase in the 4th quarter. Economists had forecast a 2.7% rise.
The main driver this morning, however, was the RBA meeting minutes.
Salient points from the minutes included:
The Aussie Dollar moved from $0.69418 to $0.69399 upon release of the figures and minutes. At the time of writing, the Aussie Dollar was up by 0.32% to $0.6941.
It will be all eyes on the Bank of Japan, its monetary policy decision, and Governor Kuroda’s press conference.
At the time of writing, the Japanese Yen was up by 0.02% to ¥107.31 against the U.S Dollar.
It’s a relatively busy day ahead on the economic calendar Key stats include ZEW economic sentiment figures from Germany and the Eurozone for June. Later in the day, 1st quarter wage growth numbers for the Eurozone are also due out.
We would expect the markets to brush aside wage growth numbers. Economic sentiment figures for both, Germany and the Eurozone will provide direction, however.
Following the EU’s budget and COVID-19 recovery plans, we may see a 3rd consecutive monthly rise. Expect any pullback to pressure the EUR.
Away from the economic calendar, COVID-19, and FED Chair Powell will be key areas of focus on the day.
At the time of writing, the EUR was up by 0.06% to $1.1330.
It’s also a busy day ahead on the economic calendar. Key stats include April’s unemployment rate and May’s claimant counts. Average wage growth and employment change figures for April are also due out.
We would expect May’s claimant count figure to have the greatest impact on the day. The UK was in full lockdown mode in April and only began easing measures in earnest through late May.
Following last week’s GDP numbers and with the BoE in action this week, the Pound will be sensitive to the numbers.
On the geopolitical front, expect chatter on Brexit to also garner plenty of attention.
At the time of writing, the Pound was up by 0.20% to $1.2630.
It’s a busy day ahead on the U.S economic calendar. Key stats include May retail sales and industrial production figures.
With the U.S government easing lockdown measures through May, the markets will be looking for a pickup in spending. Consumer spending and a pickup in service sector activity is key to the U.S economic recovery. Disappointing numbers would overshadow any upbeat industrial production figures.
We will expect April’s business inventory numbers, also due out later today, to have a muted impact.
While the stats will influence, FED Chair Powell’s testimony to Congress that proceeds the retail sales figures will be the main event.
It’s hard to imagine the FED Chair to material shift from last week’s FOMC press conference, which should test market resilience. The talk of unwavering support, however, would ease the pain.
At the time of writing, the Dollar Spot Index was down by 0.13% to 96.585.
It’s a relatively quiet day ahead on the economic calendar. April’s foreign securities purchase figures are due out later this afternoon.
We’re not expecting the numbers to influence, however, with COVID-19 news updates and FED Chair Powell the key drivers.
At the time of writing, the Loonie was up by 0.21% to C$1.3543 against the U.S Dollar.
For a look at all of today’s economic events, check out our economic calendar.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.