Archives of “July 2020” month

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Nikkei 225 closes lower by 0.16% at 22,715.85

  
Analysis, Global Indices

Little change in the Nikkei after the 4-day weekend

Nikkei 27-07

That said, Japanese stocks did recover from an early setback today so that is a positive takeaway for risk buyers when looking at the overall mood.

The Hang Seng is down by 0.4% amid the virus situation in Hong Kong – local infections hit another record high over the weekend – which is likely to prompt the city to ban dine-in services at restaurants to curb the spread of infections.
Meanwhile, the Shanghai Composite is up by 0.1% as Chinese equities are keeping a little firmer. Elsewhere, US futures are seen up by 0.4% currently.
In the currencies space, this is feeding into a weaker dollar as the trend continues from the end of last week. USD/JPY is holding a break under 106.00 while EUR/USD is looking perky as it trades slightly above 1.1700 for the time being.

Trade ideas thread – European session 27 July 2020

  
  Analysis

Daily thread to exchange ideas and to share your thoughts

It is one-way traffic in trading to start the week with the dollar being battered across the board, while gold and silver are continuing their hot streak into the new week.

WCRS 27-07
With USD/JPY breaking under 106.00 and EUR/USD threatening a further run above 1.1700, the greenback is in a really tough spot as we get things going in European trading today.
That said, given the market situation, unless we start to see a return of crisis-level fears, it is tough to imagine the dollar producing a stirring turnaround for now.
Granted the moves – especially in EUR/USD – may be a little stretched but this market loves to run with narratives for as long as it sounds good. US futures keeping a little higher after a setback on Friday isn’t really helping the dollar either.
Elsewhere, gold is now trading at fresh record highs and the sky is the limit for bullion in the long-term. As for silver, another 6% jump today sees price move above $24 and that starts to bring the focus towards the August 2013 high @ $25.11 next.
Fundamentally, both still has excellent prospects as long-term investments but the fear is that the recent run may be one that is a little “too far, too fast” and may see a sharp/violent pullback down the road before investors build positions further.
What are your views on the market right now? Share your thoughts/ideas with the ForexLive community here.

Coronavirus situation across Europe; what is happening?

  
  Analysis
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Some updates to the virus situation across Europe recently warning by Saxony state premier UK imposing a 14-days quarantine for travelers from Spain The country recorded a rise of 340 new cases today, a more modest figure but could be skewed due to the ‘weekend effect’. This compares to the slight jump of 816 and 784 new virus cases seen on 24 and 25 July respectively.The rise comes amid localised outbreaks, with a farm in Bavaria seeing more than 500 people quarantined after 174 workers were tested positive for the virus.RKI estimates the 4-day virus reproduction rate to be at 1.22 and the 7-day average to be 1.16 as of yesterday; keeping above the threshold of 1.00.There have been concerns about the rising cases across the country, with the virus reproduction rate keeping above 1.00 threshold (it was 1.3 on Saturday) while daily new infections rose by 1,130 on last Friday.On the latter, that has seen the 7-day average in terms of cases rise above 1,000 for the first time since early June.Local authorities are warning about complacency but besides , they are maintaining their course to keep the economy running.

The situation in Italy appears relatively ‘under control’ with 275 new cases reported in the past day. Regional governments are continuing to stay prudent by reinforcing the need to wear masks in public spaces so that is encouraging.The slight rise in cases in Spain is seeing countries take notice with the UK imposing a 14-day quarantine for travelers from the country, following Norway’s decision to reimpose a 10-day quarantine as well for people arriving from Spain.This comes amid a surge in cases in Catalonia but the Spanish government’s virus expert has warned that the infection is already spreading among the general community in Barcelona and Zaragoza – saying that the rate of contagion has tripled.French prime minister, Jean Castex, has also “strongly recommended” its citizens to avoid going to Catalonia (the border remains open) though the region itself announced closure of bars and nightclubs for 15 days on Friday last week.Catalonia (counted separately from Spain’s total) itself reported nearly 1,500 new cases on Saturday, as the number of new cases in the region is starting to pick up again.Despite warnings of complacency and what not, local authorities are continuing to reaffirm that these outbreaks are “localised” and have not spread out of control. The right now remains on the – or at least continuing down that path.In due time, we’ll see how this all plays out but no doubt further reopening of international borders are going to be extremely tricky.The positive takeaway is that the death rate in most places isn’t as high as when the initial outbreak began but as infection numbers rise, there could be a delayed effect on that as medical capacity also starts to be burdened even more.

Ray Dalio said conflict between the US & China would harm the US dollar

  
  Analysis

Founder of Bridgewater Associates Ray Dalio speaking over the weekend:

  • “There’s a trade war, there’s a technology war, there is a geopolitical war and there could be a capital war”
  • “If you say by law ‘Don’t invest in China,’ or even possibly withholding the payment of bonds that the United States owes payment on in China — these things are possibilities, and they have big implications, such as for the value of the dollar”
Dalio was speaking on Fox, Bloomberg have a report up here at this link for a little more.
Founder of Bridgewater Associates Ray Dalio speaking over the weekend:

White House says agreement ‘in principle’ reached on the next coronavirus economic rescue bill

  
  Analysis

White House Chief Of Staff Meadows with the statement

  • Says the White House & US Senate Republicans have reached ‘agreement in principle’ on next coronavirus aid bill
  • legislative proposal likely to be unveiled Monday afternoon; ‘handful’ of issues still to resolve

Munchy is at it too …

  • US Treasury secretary Mnuchin says package will contain extended unemployment benefits with 70% wage replacement
  • Republicans have finalised a $1 trillion virus relief plan

 

White House Chief Of Staff Meadows with the statement

EU €750bn Recovery Fund Italy worried money will not come soon enough to avert an autumn liquidity squeeze

  
  Analysis

Ambrose Evans-Pritchard in the UK Telegraph writes that Italy’s finance minister, Roberto Gualtieri,

  • told leaders of the ruling coalition behind closed doors that the treasury will struggle to cover both a budget deficit near 12pc of GDP and to redeem a mountain of old debts coming due over coming months.
  • urged a formal request to the EU’s reviled bail-out fund (ESM) to unlock €36bn of immediate pandemic loans

Evans-Pritchard citing according to Il Sole (an Italian national daily business newspaper )

Link here for more (may be gated)

Ambrose Evans-Pritchard in the UK Telegraph writes that Italy's finance minister, Roberto Gualtieri,Roberto Gualtieri

Here is what’s on the economic calendar in Asia today

  
  Analysis

2350 GMT Bank of Japan monetary policy meeting ‘Summary of Opinions’ of the July meeting

  • this precedes the minutes of that meeting by many, many weeks.

2350 GMT Japan Capex for Q1, final

  • Capital spending
  • Capital spending
  • Company profits
  • Company sales
  • The previous readings, for Q4, and the preliminaries for Q1 can be found here.

0000GMT Reserve Bank of Australia – speech by Christopher Kent, Assistant Governor (Financial Markets), at the Kanga News webinar

  • I don’t have the title nor topic of the speech but given Kent is head of financial markets it’ll be well worth tuning in for (I’ll have speech highlights and text posted at the time)

0110 GMT BOJ JGB purchase operation

0130 GMT China Industrial Profits for June % y/y

  • prior +6.0%

0430 GMT Japan All Industry Activity Index for May

  • expected -3.5% m/m, prior -6.4%
  • The data is often referred to as the monthly GDP reading, it’s a tracker production across all sectors of the Japanese economy and follows the GDP growth figures/trend.
rba kentRBA’s Kent speaking today
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