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Collinson FX: August 5, 2020 - Victorian lockdown expected to have a ‘major impact'

by Collinson FX 4 Aug 2020 21:39 PDT 5 August 2020
- Mahurangi Regatta - January 2020 - Mahurangi Harbour © Richard Gladwell / Sail-World.com

Collinson FX: August 5, 2020 - Global equities climb

Global equities continued to climb, supported by the absolute ocean of monetary and fiscal stimulus, plus stronger Manufacturing data in Europe, Asia and the USA. US Factory Orders expanded 6.2% and earnings have been strong in both Europe and the USA, except for a growing concern in the banking sector. Banks are reporting massive expansions of bad debt provisions, signaling some testing times ahead. The EUR was steady, trading 1.1780, while the GBP drifted back to 1.3050.

The RBA left rates unchanged, but the associated commentary allowed some confidence to boost markets. The RBA Governor said that the economic downturn was not as severe as originally feared, but warned the Victorian lockdown, starting tonight, was having a ‘major impact’. Australian Retail Sales improved 2.7%, while trade numbers were depressed, but moving upwards. The AUD reacted well overnight, with the AUD trading up to 0.7150, while the NZD tests 0.6600 on the downside.

The RBA has indicated that they will enter the secondary market to purchase Government debt, which is a dangerous development in monetary policy, while NZ Unemployment data may impact local markets.

Collinson FX: August 4, 2020 - US to react against Chinese software data gathering companies

Global equity markets surged to open trading in August, boosted by stronger than expected Manufacturing , in Europe and the USA. The pandemic is experiencing a serious second wave across Europe, Australia and the USA. This has resulted in an extension and increase of lock-down restrictions in Melbourne, Victoria, in an attempt to get the infection rates under control. The restriction will negatively impact Victoria and Australia’s recovery.

Tension between the USA and China continue to rise, with Secretary Pompeo confirming the President will act against data gathering Chinese software companies operating in the USA. The rising tensions between the global super-powers will impact global trade and the existing supply chain. The Dollar found some support, with the EUR drifting back to 1.1750, while the Yen moved back to 106.00.

The coronavirus situation is not helping the Australian economy and the AUD fell back towards 0.7100, while the NZD looks to test 0.6600. The pandemic and the Chinese Geo-Political situations are serious threats to the global economic recovery, but markets continue to benefit the monetary largesse.

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