Market Commentary - June 30, 2020
USD rallied Monday following a 44.3% MoM increase pending home sales data print. On the Covid front, many U.S. states revisit earlier moves to reopen the economy. Vaccine-wise, the candidate Ad5-nCoV has been looking promising and has been recently approved for human trials on military personnel.
Asian Shares trade higher even with the Chinese Parliament approval of the new Hong Kong security law that will increase Mainland's control over the region.
Figure 1 (Source Refinitic Eikon):Admidst rising tensions between US and China, USDCNH appears relatively mute. Market sentiment remains on the sideline awaiting for a tipping point.
- The Reserve Bank of New Zealand has confirmed its guidance to keep interest rates unchanged until March next year
- China PMI increases from 50.6 to 50.9. The PMI index has risen for two straight months. Supply and demand of manufacturing activity are starting to pick up.
- COVID-19 cases worldwide rose past 10 million and deaths are more than 500,000. However, rises in equities, oil futures suggest the majority of investors are optimistic about the market in the long term.
- Japan’s unemployment rate pushed higher from 2.6% in April to 2.9% in May. Japan's gauge of job availability marked a biggest fall in 46 years in May, indicating a rapid deterioration in the employment market that had been in a severe state of labor shortage.
- US Pending Home Sales m/m rises from -21.8 to 44.3%, compared to the forecast for 18.9 rise.
Tensions expected to rise between US and China as both nations seek to implement additional red-tape poised to bolster each respective parties rhetoric. In the thick of it, Hong Kong as China begins implementing piecemeal reforms aimed at assimilating the Special Administration Region back under One-China, whilst across the Pacific US initiates rolling back Hong Kong’s special trade status. The Trump administration unlikely to ease off rhetoric in the coming months as Presidential elections loom in November.
Speaking of elections, Singaporeans in the coming nine-days till 10th July will be deluged by campaign slogans, ads and banners in hotly contested constituencies. Predicted to win, the current ruling People’s Action Party, of whom have yet to lose since 1965.
All eyes on Federal Reserve Chairman Jerome Powell tonight, expected to testify before the House Financial Services Committee in Washington together with Treasury Secretary Steven Mnuchin. Previous remarks denote alongside containing the Corona virus outbreak, fiscal relief and accommodating monetary policy is key in returning confidence that would allow people to reengage in economic productivity.
Headliners to Watch
- As France and Italy is set to pull themselves out of their deflationary rut, Euro Zone as a whole looks be experiencing disinflation YoY.
- French and Italian prelim CPI forecast to increase from 0.1% and -0.2% to 0.4% and 0.1% respectively.
- Euro zone estimates a decline to -0.1% from 0.1%
- No light at the end of the tunnel with Canadian GDP predicted to deepen from -7.2% to -10.5%.
- French consumer spending expected to experience their highest historical rebound to 30% MoM
- US Chicago PMI set to increase to 42.0 from 32.3 as consumer confidence expects gains from 86.6 to 90.1
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Topics: Market Commentary