Market Commentary - August 10, 2020
For the week ahead, initial focus will be on the four executive orders Trump signed in providing temporary relief to the US economy, bypassing congressional law makers. Among other nuances, a difference of $2.4tn currently divide Democrats and Republicans from signing a deal. Thus far, Asia has opened slightly upbeat with US, UK and EU futures looking to edge higher. The American greenback experiences one of few reliefs, halting its depreciation and ended up on Friday close. Much of market sentiment still sees the dollar depreciating over the long term amid continuous quantitative easing by the Fed and expectations on top of Trump’s aid relief, US congress will etch out another stimulus package.
Turkish lira continues to hold ground as attempts to settle above the 7.3000 level fails. Moves from Turkish authorities suggest they will be taking a step back from active intervention when over the weekends regulators announced tax exemptions for foreign exchange trades. Elsewhere, Mexico’s central bankers will convene on Thursday, likely to cut policy rates for the 10th consecutive time, while Peru, Egypt and Serbia expected to hold rates steady.
Figure 1 (Source: Refinitiv): Bitcoin Daily Chart - Interest in bitcoin see's a resurgence with the cryptocurrency continuing its' upward momentum
Bitcoin briefly surpassed $12,000 this morning, whilst futures products over the weekend hit $100,000 on Binance over a rogue algo. Though the cryptocurrency has made headwinds in years in garnering reputation, trust and practicality, dubious volatility has slowed populace adoption. Nonetheless, Goldman Sachs’s recent appointment of Mathew McDermott, developer of JPM coin, as head of digital assets strategy. See’s the investment bank positionings themselves for mass acceptance, particularly in the institutional space.
Headliner to Review
- US cases now surpass 5M with 160,000 killed across the nation. President Trump signed four executive orders restoring enhanced unemployment payments to millions of Americans who lost jobs. However, benefits fell short as they have been reduced from $600 to $400. Payroll tax was also suspended for individuals earning less than $100,000. Democrats have voiced the actions as unconstitutional and a preliminary step in gutting social security.
- The employment figures are better than expectations in the US. The average hourly earnings increased from -1.3 to -0.5%. Non-farm employment change decreased from 4.791 million to 1.763 million but still exceeding consensus of 1.530 million. The unemployment rate dropped from 11.1 to 10.2%. July saw a return in leisure and hospitality jobs followed by growths in government jobs and retail. With the rate of new infections slowing, leading indicators show that it is a sign of a renewed upturn. Employment figures will continue to rebound in the coming months but at slower than expected rate.
- In Canada, employment change decreased from 952,900 to 418,500, which is better than the forecast 395,000. The Canada Ivey PMI increased from 58.2 to 68.5, which is the highest reading since April 2018.
Headliner to Watch
- Australian business confidence expected to stagger in July. Confidence recovered from March low’s of -66 to 1 in recent months. However, the resurgence in cases in Victoria, resulting in a state-wide lockdown has impacted businesses. With neighboring border closures in New South Wales and Queensland sentiment is seen to remain pessimistic in months to come.
- Following better than expected figures from US non-farm employment change on Friday, JOLTS job opening reports looking to decline to 5.30M from 5.40M. Though, still not at pre-pandemic levels, job openings have remained relatively healthy. A silver lining among the 20M Ameircan’s who have lost their jobs.
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Topics: Market Commentary