Pause, Think, Act

Asian shares cheer the hopes of further corporate debt, increasing odds of the pandemic’s cure. Global virus numbers rise beyond 13.00 million with the US, Brazil and India on the top. Gilead’s Remdesivir, trials in the UK and Australia are all suggesting that the vaccine is nearer.

Below are thumbnail sketches of the events and data that shape the macro picture.

Country

US

• The US alone recorded 59,747 new infections in the last 24 hours, according to Johns Hopkins University. With that, the total number of cases in the US crossed the 3.3 million mark.
• The weakness in the greenback, a preferred safe haven since the beginning of the virus crisis, could be attributed to the uptick in the US stock futures. At press time, the S&P 500 futures are reporting a 0.5% gain, a sign the risk sentiment remains strong and stocks are likely to extend Friday’s rally.
• Last Friday, US President Donald Trump said that the completion and enforcement of “Phase 2” of a US-China trade deal will not likely occur soon. He said that the coronavirus “severely damaged” Washington’s relationship with the Asian giant, and that consequently, it is not being made a top policy priority. The China-sensitive Australian and New Zealand Dollars suffered after he made those comments.
• This topic may become a bigger headline if the 2020 Presidential election polls show Mr. Trump in the lead. Markets may then have to brace for another four more years of trade tension that spoiled global growth prospects. It also led to the outbreak of unilateralism across the world and created even more policy uncertainty for market participants who were accustomed to operating on a foundation of interconnection and cooperation.

UK

• Speaking to the UK media on Sunday, the UK Cabinet Minister Michael Gove said that Brexit transition will likely happen by the end of this year, irrespective of the type of agreement reached with the European Union (EU).

EURO EYES EU LEADERS SUMMIT

• Between July 17-18, leaders of the 27 EU member states will convene to discuss a EUR750b aid package to help restore economic activity in the virus-hit bloc. The funds would be allocated to the countries and sectors hit hardest by the Covid-19 pandemic and would come in the form of grants – EUR500b – and loans – EUR250b.
• However, this major policy initiative has also widened the rift between the traditionally more fiscally-conservative North and their Southern counterparts. Members of the former want to reduce the amount of aid distributed through grants, while the latter prefers less of it in the forms of loans. Mediterranean states like Italy still have a bitter taste in their mouths from the Greek debt crisis and the austerity measures that followed.
• Failure to reach consensus could see sovereign bond yields on comparatively riskier debt – like Portugal, Italy, Greece and Spain – rise at the expense of the Euro and regional equity indices. At a time of great division, the politically-sensitive Euro needs now more than ever signs of unity, stability and coordination. Doubt there could cause it to plunge against the anti-risk Japanese Yen, Swiss Franc and haven-linked US Dollar.Australian Data

Japan’s relaxing restricitions

• The Bank of Japan appointed news head of the monetary policy team to tackle the economic woes spread by the COVID-19.
• The BOJ eased monetary policy in March and April, easing corporate funding strains triggered by the outbreak. It is expected to keep policy steady at a two-day rate review ending on Wednesday.

China

• China’s Financial News said in a commentary on Monday, the People’s Bank of China’s (PBOC) monetary policy will focus more on “moderateness”, while structural policies will be the optimal choice to support small firms and stabilize employment.

Market

Crude Oil

• CME Group’s advanced prints for Crude Oil futures markets saw traders scaling back their open interest positions by around 8.5K contracts at the end of last week and reversing two consecutive drops. Volume, instead, rose for the third straight session, this time by around 80.7K contracts.

Gold

• Gold is better bid at press time with prices trading above $1,800 per ounce alongside a weak tone in the US dollar, the yellow metal’s biggest nemesis.
• The greenback is trading in the red despite the continued rise in the number of coronavirus cases in the US and other parts of the world.

Here’s a look at all the important market-moving factors for the week:

Week Ahead

All times listed are EDT

Tuesday

2:00: UK – Claimant Count Change: seen to drop to 400.0K from 528.9K.

2:00: UK – GDP: anticipated to rise to 5.0% QoQ from -20.4% previously.

2:00: UK – Manufacturing Production: expected to surge to 8.0% from -24.3%.

5:00: Germany – ZEW Economic Sentiment: probably edged lower, to 60.0 from 63.4.

8:30: US – Core CPI: forecast to rise to 0.1% for June from -0.1%.

8:52: China – Exports: predicted to have dropped to -1.5% YoY in June, from -3.3% in May.

 Wednesday

2:00: UK – CPI: expected to remain flat at 0.5%.

8:30: US – NY Empire State Manufacturing Index: foreseen to 9.25 from -0.20.

10:00: Canada – BoC Interest Rate Decision: forecast to remain steady at 0.25%.

10:30: US – Crude Oil Inventories: seen to show a drawdown of -3.114M bbs, from a gain of 5.654M.

21:30: Australia – Employment Change: predicted to surge to 112.5K from -227.7K.

22:00: China – GDP: seen to soar to 2.1% YoY from -6.8%.

22:00: China – Industrial Production: expected to edge higher to 4.7% from 4.4%

Thursday

7:45: Eurozone – ECB Interest Rate Decision: predicted to remain flat at 0.00%.

8:30: US – Core Retail Sales: seen to fall to 5.0% from 12.4%.

8:30: US – Initial Jobless Claims: anticipated to shrink to 1,250K from last week’s 1,314K.

8:30: US – Philadelphia Fed Manufacturing Index: expected to decline to 20.0 from 27.5.

8:30: US – Retail Sales: seen to plunge to 5.0% from 17.7%.

8:30: Eurozone – ECB Press Conference 

Friday

5:00: Eurozone – CPI: probably remained stead at 0.3% YoY and rose to 0.3% from -0.1% MoM

8:30: US – Building Permits: expected to have risen to 1.280M from 1.216M.

Based on the above factors and the events lined up for the week, the analyst at RvR Ventures suggests you to Trade responsibly; invest only as much as you can lose. All the profits and losses due to the above data are your own personal responsibility. Kindly practice money management & risk mitigation while trading.

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