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Trading Week Ahead: 29th June – 3rd July 2020

jeffriess
June 28, 2020
by Joseph Jeffriess, Market Analyst

Article Recap

Key Events and Data Releases This Week


Monday
GBP BOE Gov Bailey Speaks

Tuesday
RMB Chinese Manufacturing PMI
CAD Canadian GDP

Wednesday
USD Fed Chair Powell Testifies, ADP Non-Farm Employment Change

Canadian Bank Holiday

Thursday
USD Average Hourly Earnings, Non-Farm Employment Change, Unemployment Rate

Friday
US Bank holiday

(Times adapted to AEST timezone)

C for chop is the best way I would describe last week, well in some markets anyway. Risk markets started the week well with strong gains to the USD and JPY while, you guessed it, the Nasdaq hit new records, with traders seeing 4% gains early in the week as price pushed above the 10,200k level. Things took a negative turn during Wednesday’s session as worries over increasing COVID-19 cases sparked concerns that a second wave was intensifying. Did the first wave really end in the U.S.? What I have been seeing is a transfer in growing infection rates from one state to another. Regardless of whether this was the key driver or not, stocks hit the brakes on Wednesday and the Dow saw a 700 point decline. Oil started the week firm but also fell due to midweek selling, with a price decline close to 7% in two sessions. Output cuts and global demand continue to be the key factors for the current time.

Gold was once again the real winner of the week as global uncertainty, and a mixed USD, helped maintain its current uptrend. Metals continue to be talked about, gold is one, but copper is the other analysts are thinking could increase in value due to the coronavirus pandemic. Iron ore has already been driving higher on supply worries after the virus interrupted mining operations in Brazil and to a lower extent, Australia. Back to Gold, the price hit 1779 last week, a level not seen since 2012.

Data showed some nice surprises over the week and did give further evidence that recoveries are slowly continuing. Europe’s flash PMI data came in better than expected and provided a good sign that European nations are moving out of lockdown. French manufacturing hit 52.1 and services hit 50.3. Germany’s data also surprised, with services coming in at 45.8 and manufacturing hitting 44.6. This is positive as Germany is the EU’s largest economy. Eurozone data also beat expectations, as did UK services and manufacturing. U.S. durable goods data was another mega beat with core hitting 15.8% and durable goods hitting 4%. It’s great to see this coming out, but we’re still not out of the woods yet. We’re currently seeing how quickly this virus can come back or expand. Florida in the U.S. is currently experiencing very high infection rates, and here at home, we’ve seen a new worrying breakout in Melbourne, Victoria that has seen some of the proposed relaxation steps cancelled and other lockdown measures reestablished.

Looking Ahead

This week traders will most likely stay focused on the recovery, Chinese manufacturing data comes out Tuesday and markets will be looking for growth in this area from the world’s 2nd largest economy. On Wednesday morning, Fed Chair Jerome Powell testifies while U.S. employment data will come in a day early on Thursday, due to the 4th of July holiday. This should be the highlight of the week. Traders will be looking for continued job growth in the Non-Farms Payroll and a further improvement in the unemployment rate.

All times are AEST.