Essential Insights 

  • Dollar Index slips key 93.00 level with global equity bourses under pressure 
  • GBP/USD continued its aggressive bullish run, breaking above 1.3100 during Asian trading hours 
  • Northern England has had to revert back to a lock down state as virus cases pickup heading into the summer

USD 

Global equities slipped overnight alongside the dollar index (DXY) following a massive contraction in US GDP (biggest contraction historically), supporting concerns on a slowdown of economic recovery. Q2 2020 US GDP saw growth dropping by a staggering -32.9 % quarter on quarter. Bear in mind this is quarter on quarter data i.e Q1 vs Q2, which highlights how much of an impact COVID-19 is still having on businesses and consumers. Markets have been pricing in Q1 being the worst quarter and everything following thereafter to be a gradual recovery, this is clearly not the case.

Texas reported a second day of consecutively record numbers of fatalities from COVID-19, US President Trump said that in some cases a ‘small shutdown’ might be helpful, though this would not last very long. Non the less, this cautious tone set by Trump himself, who has been very pro-recovery, has contributed towards the risk-off mood in the market where the chances of a nationwide shutdown may begin to increase.

GBP

GBP/USD continued its aggressive bullish run, breaking above 1.3100 during Asian trading hours, up 1% from yesterdays bullish rally. UK PM Boris Johnson also re-enforced lockdowns in Northern England, following a noticeable spike in COVID-19 cases as we head into the summer. People in Greater Manchester. East Lancashire and West Yorkshire and no longer allowed to meet indoors.

China 

China’s manufacturing PMI saw a positive result for the second month in a row, coming in at 51.1 versus 50.9 in June. This comes as infrastructure has been increasing along with exporting activity, suggesting export resilience. A PMI figure above 50 typically refers to an economy that is growing whilst a number below 50 indicates economic contraction.

Looking Ahead 

  • 13:30 – US personal income (Estimates : -0.3% m/m, Consensus: -0.5% m/m)
  • 13:30 – US personal spending (Estimates: 3.5% m/m, Consensus: 5.5% m/m)
  • 15:00 – US final U of Michigan consumer sentiment (Estimates: 73.2, Consensus: 72.7)