Trading Week Ahead: 3rd August – 8th August 2020

สิงหาคม 2, 2020
by Joseph Jeffriess, Market Analyst

Article Recap

Key Events and Data Releases This Week

Canadian Bank Holiday

USD ISM Manufacturing PMI
AUD Cash Rate, RBA Rate Statement

NZD Employment Change, Unemployment Rate

USD ISM Non-Manufacturing PMI
NZD Inflation Expectation
GBP BOE Monetary Policy Report, MPC Official Bank Rate Votes, Monetary Policy Summary, Official Bank Rate

AUD RBA Monetary Policy Statement
CAD Employment Change, Unemployment Rate
USD Average Hourly Earnings, Non-Farm Employment Change, Unemployment Rate

(Times adapted to AEST timezone)

Last Week’s Key Moments

It was a cracker of a week for risk currencies, gold and Bitcoin, as we saw continued rallies to the USD carrying forward. The dollar continues to be dragged lower as Covid-19 hammers the US economy. The U.S. GDP data released last week showed just how big that hammer is with the 2nd quarter coming in at -32.9%

The U.S. wasn’t the only economy facing GDP drops, Germany also saw a more significant than expected fall of –10.1%, which led to a sharp sell-off on the DAX in Thursday’s session. Despite an agreement on an EU stimulus package, the damage persists in the EU, as Spain reported its economy contracted by 18.5%. The EU reported its own contraction of 12.1%, the trading bloc’s largest since data started being reported in 1995. 

Are we now seeing a clearer picture of the damage that was always going to be uncovered? Believe it or not, the drop in U.S. GDP was expected, and the realised figure came in better than the -35% that was widely expected. 

The EUR, for now, has shaken off the bad news, adding 1.80% to the USD and 0.63% to the Yen continuing its 3-week charge. The GBP and AUD also saw good weeks to the USD. The GBPUSD started, adding 2.56% and breaking back above 1.3100. The AUD lagged the other two main risk currencies last week, Australian CPI data was a factor as it missed, with the trimmed mean coming in at -0.1%

The Fed met and held rates as expected, while also extending its lending program through to Dec 31st.  Some talk of new stimulus emerged but could not be passed. President Trump is asking for checks to be more than 1200 USD, party defiance with a group of Republicans asking for $1000 payment per individual. 

US stocks saw a mixed week, with the Dow flat after some solid swings. The Nasdaq gained despite congress grilling the top US tech companies. The SPX moved higher but failed to break the prior week’s high. Staying with Tech, Apple reported revenue growth of 59.69B and earnings per share of $2.58 both beating analysts expectations. The company also advised an upcoming share split.

We can’t forget Gold. The yellow metal continued its incredible rise last week buoyed by a weaker USD and continued economic worries. Price reached 4.85% highs testing back above 1980. We also saw a break of the September 2011 high. Gold’s demand also fed into Bitcoin as it made a new surge adding as much as 15%, helping buyers to break back into the 11,000 handle. 

XAUUSD Monthly

Looking Ahead 

This week some of the key points to keep an eye on include NZ employment data. With a healthy figure of 4.2%, will we see further improvement now that New Zealand has been out of lockdown for a decent time and will the economy be back and running closer to capacity?

Then there’s the Bank Of England, what will we see in the statement, and what measures are on the table to help the UK economy? Will we hear further details on the 30+ billion stimulus package? US jobs data also remains in the focus, and as usual, will be looked at as the main event of this week. Last week unemployment claims rose, which wasn’t expected. Without calling anything, will we see the run of the better than expected bad figures stop? The unemployment rate stands at 11%, with the 2nd quarter contraction having an impact?

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