Market Commentary – July 13, 2020

Kevin Jock

13th July 2020

     Faced with the rising rate of global infections, markets diverge from grim realities and continue to rally. On the surface, much of the rally seemingly supported by talks of additional fiscal relief in the works and prolong low rates to remain. Others suggest markets have come to realize an alternate theory. The global economy is transforming upon accepting working-from-home does not affect productivity, the exponential rise of e-commerce and in turn a re-invention of logistics

     “Asian shares crept toward five-month peaks on Monday as investors wagered the U.S. earnings season would see most companies beat forecasts given expectations had been lowered so far by coronavirus lockdowns,” Reuters reports.

Figure 1 (source: Refinitiv Eikon) USD trades lower against a basket of other currencies. 


Headliner Review

  • Canada Employment Change rebounds from 289,600 to 952,900, which is much better than the expected 700,000. The unemployment rate drops from 13.7% to 12.3%. The USD and CAD pair would benefit from the better Canada employment figures.
  • US core PPI month to month decreases from -0.1% to -0.3%. US PPI month to month drops from 0.4% to -0.2%. Both indices drop much worse than the expected. PPI is a thought to be a leading indicator of consumer inflation. A lower than expected would be considered as negative factor for the USD.
  • The lack of statistics leaves COVID-19 in focus. The total number of coronavirus cases has been increased to 13 million, where there are 571 deaths. The daily increase on Sunday was a bit lower than Saturday and Friday but the number of cases is still around 200k per day. The cases in the US is dropped on Sunday compared with Friday and Saturday but the number of cases is still quite a lot. There are around 60K cases per day in the US.


Up Next
     Central Bank will be closely watched this week with several key announcements and speeches. G20 meetings commence this upcoming weekend.


  • A budget to balance with US Federal Budget expected to recover from – 398.8B to -350.0B. while an historic $2.3 trillion fiscal stimulus package supported the nation, business hand-outs and unemployment benefit top-ups is ending in the coming months. As daily cases continue to break records, a second stimulus package is in the works but yet to be heard on house and senate floors.
  • Business confidence in Australia set to wane. Previous figures illustrated a steady recovery, however the fresh resurgence in Coronavirus cases and inter-state border closures leaves Aussie without a light at the end of the tunnel.
  • An optimistic stock market backed by macroeconomic figures. Whilst considered ground zero for COVID-19, China’s swift response leaves other nations in the dust. Trade balance figures have already recovered from March lows with today’s figures set to remain steady at 410B.
  • As Britain has made piecemeal steps towards easing lockdown measures. Re-opening of leisure facilities, pubs, and restaurants. Laxed social distancing rules. Market consensus sees the British economy rebounding back with MoM GDP figures at 5% from -20.4%.
  • Pessimistic figures expected to come out of New Zealand regarding MoM visitor arrivals. Previous figures revealed a 98.9% decline. A devastating blow for a $40.9 billion tourism industry. And in turn GDP, as tourism contributes directly and indirectly approximately 10% to New Zealands economy. With the recent lapse in border security where two UK travelers slipped through the cracks, closures are expected to stay in the foreseeable.
  • Both BOE Governor Baily and FOMC Member William due to speak in a panel discussion webinar regarding “Libor: Entering the Endgame”


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Antony Tan
Ben Li
Kevin Jock