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Bob Mason
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On the Macro

It’s a busy week ahead on the economic calendar, with 70 stats in focus in the week ending 3rd July. In the week prior, 44 stats had also been in focus.

For the Dollar:

It’s a particularly busy week ahead on the economic data front in what is a shortened week.

We’re now beyond May numbers and getting a better idea of the economic environment at the turn of the quarter.

Key numbers in the week:

CB Consumer Confidence figures for June get things going on Tuesday. An upward trend will need to continue to support a more positive outlook on spending. The latest shift in reopening and spike in new COVID-19 cases will offset the effect of any positive numbers, however.

On Wednesday, ADP Nonfarm Employment Change figures for June could give risk appetite a boost. It would have to be a full recovery of the decline in May, with interest…

The market’s preferred ISM Manufacturing PMI is also due out on Wednesday. A material slowdown in the pace of contraction is anticipated. Anything worse will be a test, though the ISM Non-Manufacturing PMI in the following week is far more significant.

The focus then shifts to Thursday…

June’s nonfarm payrolls and unemployment rate are due out. After better than expected figures in May, can the rehiring trend keep pace?

Economists are optimistic about another jump in hiring. It may not be enough, however, to bring the unemployment rate down to sub-10%. That could be an issue…

On Thursday, the weekly jobless claims will also influence. We expect factory orders and trade data for May to have a muted impact, however.

On the monetary policy front, the FOMC meeting minutes on Wednesday will garner plenty of attention. Following recent moves by the FED, however, there may not be too many surprises.

The U.S markets are closed on Friday in recognition of American Independence.

The Dollar Spot Index ended the week down by 0.19% to 97.433.

For the EUR:

It’s a relatively busy week ahead on the economic data front.

June’s private sector PMIs for Italy and Spain are due out on Wednesday and Friday. Finalized PMIs from France, Germany, and the Eurozone are also due out.

Expect plenty of interest in the numbers.

French and German retail sales and German employment figures due out on Tuesday and Wednesday will also provide direction. Consumer spending will need to rebound for a swift economic recovery… A marked rise in hiring is also going to be needed to support consumption.

Expect prelim June inflation figures and the Eurozone’s unemployment rate to have a muted impact, however.

The EUR/USD ended the week up by 0.37% to $1.1219.

For the Pound:

It’s a relatively busy week ahead on the economic calendar.

Key stats include finalized 1st quarter GDP numbers and finalized June private sector PMIs.

Following the dire GDP numbers, there would have to be a material revision to influence the Pound.

Any upward revision to the manufacturing (Wed) and services PMI (Thurs) would provide support, however.

Ultimately, any moves will be hinged progress towards a British trade agreement with the EU.

While there’s no extension to the transition period, negotiations are to continue into July. A solid base is going to be needed, however, to fuel hope of an agreement in the coming weeks.

On the monetary policy front, the BoE’s Financial Stability Report is due out on Friday. While it’s unlikely to be pretty reading, there’s unlikely to be anything new…

The GBP/USD ended the week down by 0.11% to $1.2336.

For the Loonie:

It’s a relatively busy week ahead on the economic calendar.

On Monday, May’s RMPI is due out ahead of April GDP figures on Tuesday. Expect some influence ahead of May trade data due out on Thursday.

It’s also a shortened week, with the Canadian markets closed on Wednesday in recognition of Canada Day.

Outside of the stats, PMI and labor market numbers from the U.S and China will influence, as will COVID-19 updates and any chatter on tariffs.

The Loonie ended the week down by 0.60% to C$1.3688 against the U.S Dollar.

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Out of Asia

For the Aussie Dollar:

It’s also a relatively busy week ahead for the Aussie Dollar.

In the 1st half of the week, June’s AIG Manufacturing Index is due out on Wednesday.

While we can expect some influence, China’s Manufacturing PMI will likely overshadow the numbers.

The focus will then shift to a big set of numbers on Friday. May retail sales and trade data are due out.

Expect plenty of influence from the Friday numbers. The RBA has been optimistic that the economy would likely avoid worst-case scenario projections. Friday’s figures will certainly indicate whether that is the case…

From elsewhere, expect private sector PMIs from China, the EU, and the U.S to also influence.

The markets will also need to keep an eye on the COVID-19 numbers in the week. Another spike could leave the Aussie back at sub-$0.66 levels…

The Aussie Dollar ended the week up by 0.44% to $0.6865.

For the Kiwi Dollar:

It’s a quiet week ahead on the economic calendar.

On Tuesday, June business confidence figures are due out on Thursday, which will draw plenty of attention.

We keep highlighting the importance of a continued uptick in business and consumer confidence to support an economic recovery.

Expect PMIs from China and COVID-19 numbers to also influence. New Zealand had been free from the coronavirus until last week. Any rise in new cases would sound the alarm bells once more.

The Kiwi Dollar ended the week up by 0.25% to $0.6423.

For the Japanese Yen:

It is a busy week ahead on the economic calendar, though there’s unlikely to be too much influence on the Yen.

On Monday, May retail sales figures are in focus ahead of industrial production figures on Tuesday.

The focus will then shift to 2nd quarter Tankan survey-based numbers and finalized private sector PMIs. The manufacturing PMI is due out on Wednesday ahead of the services PMI on Friday.

We may see stats from the U.S and China have a more significant impact in the week.

Geopolitics and COVID-19 updates will also need monitoring.

The Japanese Yen ended the week down by 0.33% to ¥107.22 against the U.S Dollar.

Out of China

It’s a busy week ahead on the economic data front. Key stats include June’s NBS private sector PMIs on Tuesday and Caixin private sector PMIs. The Caixin Manufacturing PMI is due out on Wednesday, with the Services PMI due out on Friday.

Expect plenty of sensitivity to the numbers. Commodity currencies would be at the mercy of any surprise dip…

The Chinese Yuan ended the week down 0.10% to CNY7.0782 against the U.S Dollar.

Geo-Politics

UK Politics:

Not only does the UK government need to deal with Brexit, but now there is also the threat of U.S tariffs. Trump announced the prospect of tariffs on the UK amongst other EU nations. Sadly, the U.S President failed to recognize the transition period and Britain’s departure from the EU. Britain will need to push for further discussions on a trade agreement with the U.S, to avoid fresh tariffs.

Expect Brexit to remain the key driver, however, with a trade war unlikely with the U.S…

U.S Politics:

Foreign policy with China, the EU, and the UK should remain the key area of focus… Then we have COVID-19 and the pause in shutdowns. Should the trend continue, expect risk aversion to plague the markets…

The Coronavirus:

Over the weekend, news updates of a fresh spike in new COVID-19 cases will give the markets little comfort.

China, Germany, Italy, and South Korea all reported localized clusters. From the U.S, 12 states are reportedly pausing reopening. There was a new record high number of new cases reported on Saturday.

From the market’s perspective, the 3 key considerations have been:

  1. Progress is made with COVID-19 treatment drugs and vaccines.
  2. No spikes in new cases as a result of the easing of lockdown measures.
  • Governments continue to progress towards fully opening economies and borders.

Based on the figures last week and from the weekend, points ii) and iii) in particular have been market negative.

As the threat of a 2nd wave rises, it is also unlikely to have a vaccine in the coming weeks.

This is also market negative should the number of new cases continue to rise, as it would require the need for another total lockdown in affected economies.

At the time of writing, the total number of coronavirus cases stood at 10,092,613. Monday to Saturday, the total number of new cases increased by 1,048,069. Over the same period in the previous week, the total number had risen by 929,092.

Monday through Saturday, the U.S reported 239,880 new cases to take the total to 2,596,537. This was up from the previous week’s 168,434, further supporting concerns over a 2nd wave.

Significantly, the U.S reported more than 40,000 new cases for a 3rd consecutive day on Saturday. Before this period, the number of new cases had not exceeded 40,000 since 24th April.

For Germany, Italy, and Spain, there were 6,948 new cases Monday through Saturday. This took the total to 730,374. In the previous week, there had been 6,841 cases over the same period.

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