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U.S Jobless Claims, Geopolitics, and COVID-19 To Drive Risk Sentiment and the Dollar

Bob Mason
·4-min read

Earlier in the Day:

It was a relatively quiet start to the day on the economic calendar on Thursday. The Kiwi Dollar was back in action in the early part of the day.

Away from the stats, it will be a testy start to the day. Risk aversion spilled into the Asian session. Reports of rising COVID-19 numbers tested risk sentiment early in the day. The number of new coronavirus cases for Wednesday, released early today, reflected the spikes.

Looking at the latest coronavirus numbers

On Wednesday, the number of new coronavirus cases rose by 174,860 to 9,504,264. On Tuesday, the number of new cases had risen by 158,646. The daily increase was higher than Tuesday’s rise and 125,202 new cases from the previous Wednesday.

Germany, Italy, and Spain reported 1,463 new cases on Wednesday, which was up from 952 new cases on Tuesday. On the previous Wednesday, just 2,480 new cases had been reported.

From the U.S, the total number of cases rose by 38,253 to 2,459,173 on Wednesday. On Tuesday, the total number of cases had risen by 34,399. On Wednesday, 17th June, a total of 23,628 new cases had been reported.

For the Kiwi Dollar

New Zealand’s annual trade deficit narrowed from NZ$2,410m to NZ$1,330m in May, which was a narrowing of NZ$1.1bn.

According to NZ Stats,

  • Imports stood at NZ$4.1bn in May 2020, down from NZ$5.6bn (-25.6%) in May 2019.

    • Motor vehicle imports slid by NZ$451m (-60.9%).

    • The import of petroleum and products fell NZ$422m (-56.2%) from May 2019.

  • Total exports fell by NZ$350m (6.1%) to NZ$5.4bn from May 2019.

    • Logs were a main contributor to the fall, down NZ$41m (-12.3%) from May 2019.

The Kiwi Dollar moved from $0.64098 to $0.64059 upon release of the numbers. At the time of writing, the Kiwi Dollar was down by 0.06% to $0.6406.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.01% to ¥107.03 against the U.S Dollar, while the Aussie Dollar down by 0.10% to $0.6862.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. Germany’s GfK Consumer Climate figures for July are due out ahead of the European session.

While we will expect some influence from the numbers, there is talk of U.S tariffs on Germany, France, and Spain. The last thing that the EU needs is a trade war, as Trump looks to divert attention away from domestic woes.

For Germany, a recent cluster and Wednesday’s rise in new COVID-19 cases across Germany, Italy, and Spain will also be a concern. A wide reintroduction of lockdown measures would send the EUR into a dive.

At the time of writing, the EUR was flat at $1.1251.

For the Pound

It’s another particularly quiet day ahead on the economic calendar. There are no material stats due out to provide the Pound with direction.

A lack of stats will continue to leave the Pound in the hands of market risk sentiment and any updates from Brexit negotiations.

At the time of writing, the Pound was down by 0.03% to $1.2415.

Across the Pond

It’s a busy day ahead on the U.S economic calendar. Key stats include the weekly jobless claims and core durable goods orders for May.

While a pickup in core durable goods orders is needed, the weekly jobless claims will need to come in well below 1.5m levels to provide any support to riskier assets…

Finalized 1st quarter GDP and May trade figures will likely take a backseat on the day.

Away from the numbers, however, the Dollar could find more support should states continue to report rising new COVID-19 cases. There could also be more trade war chatter from the Oval Office to test risk appetite further…

On Wednesday, the Dollar Spot Index rallied by 0.52% to end the day at 97.148.

For the Loonie

It’s a quiet day ahead on the calendar. There are no material stats due out of Canada to provide the Loonie with direction.

A lack of stats will leave the Loonie in the hands of COVID-19 updates and market risk appetite in general.

At the time of writing, the Loonie was down by 0.04% to C$1.3643 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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