SMATS FX Weekly Market Report | Monday 03 August 2020

USD

Another tough week for the US Dollar as COVID-19 cases continue to rise uncontrollably and uncertainty surrounding the next round of stimulus from the US government to support the economy. US balance of trade figures are due out on Wednesday, it is expected that the US budget will improve from US$-54.6 B to US$-50.3B. Factory orders for June have been forecast to advance by 6.5% for June while unemployment is expected to decline from 11.1% to 10.5% for July. The most important driver of the week will likely be the Non-Farm Payrolls that are expected to check in with an increase of 2.2 million jobs for July.

Influences on HKD, SGD & AED

Our exotic currencies this week look to remain relatively inactive and move in line with USD movements in the absence of hard-hitting data reports. Singapore will be releasing June’s retail sales data; it is expected to have gained by 22% when it is released on Wednesday. The Emirates NBD PMI for July is likely to show 50.1 which shows signs of expansion and should be positive for the UAE despite the expected drop from 50.4.On Monday, the Singaporean manufacturing PMI has been forecast to rise from 48.0 to 48.2, which should see some short-term SGD strength.

AUD

The Aussie Dollar had a topsy-turvy week but ultimately ended as a net loser. Negative economic updates along with inconsistent risk sentiment caused the Aussie to have a mixed week. The Reserve Bank of Australia will be releasing their monetary statement after keeping interest rates at 0.25% in July. Last week the state of Victoria will be imposing a 4-week lockdown in Melbourne as COVID-19 cases surge once more. Aussie retail sales are expected to slow down to 5% in June while the trade balance is expected to show a tighter trade surplus with both releases expected out during Tuesday’s Asian session.

NZD

The Kiwi Dollar took a big hit last week, ultimately coming out as the worst performing currency. With a lack of news out of New Zealand, risk sentiment and counter-currency action weighed on the NZD. There are some big numbers to keep an eye on for the New Zealand Dollar, the quarterly unemployment report should give some insight as to how the New Zealand economy has coped with the virus, it is expected that the unemployment rate will rise to 4.2% for the 1^st quarter of the year while analysts say it could rise to almost 6% for the 2^nd quarter. Quarterly inflation expectations are likely show that it could slip to 1.0% when it is released on Thursday. Vaccine headlines, stimulus prospects and lockdown updates should impact demand for the NZD this week.

EUR

The Euro had a strong week last week as the safe-haven took advantage of counter-currency weakness and global economic uncertainty. Yet another week of mid-tier data reports to drive the Euro’s strength. Eurozone PPI is expected to show 0.6% when it is released on Tuesday, retail sales for June has been forecast to show a 6.5% increase after gaining 17.8% in May. Germany’s factory orders for June is due out on Thursday, the largest economy in the Eurozone is expected to rise by 11%.

GBP

The British Pound takes top spot this week gaining at least 1 percent on most major currencies thanks to improving UK economic updates and counter-currency weakness. This week the Bank of England will be making their rate decision on Thursday, it is widely expected that they keep rates at 0.10%. The BOE also stated in their last meeting to expand asset purchases by £200 B. The UK government is in talks with the US and Japan with regards to almost £40 B worth of trade which could provide some support to the economy.