Market Update:

A World Caught In Dilemma, Hopeful For The Recovery Or Fearful Of The Second Pandemic Wave

(22 June 2020) 

Quoting the speaker from Barclays: “the forex market is to remain caught between recovering economic indicators and concerns about the second wave of Covid-19 infections in the week ahead”.

International trades and the global economy are recovering as lots of countries partially resume economic activities, this can be seen from the rise of commodity currencies such as AUD. Yet the fear for another wave of outbreak keeps JPY and XAU high.

USD
Dollar touched a three-week high last week, with a slight slump today as the market’s risk appetite is gaining in conjunction with the global economic recovery. US Federal Reserve warns on the stress on the US economy as companies suffering from heavy loans, citizens selling off properties, 2-digits unemployment rate expected to continue, and the high number of new coronavirus infection cases.

GBP
Pound is seeing some gains, UK’s retail sales figure in May is much higher than April’s due to easing of the lockdown. The market is still watching whether this recovery is temporary or long-term.

AUD
As mentioned above, AUD as a commodity currency is seeing huge gains on Monday morning due to global optimism on recovering international trades.

EUR
EUR is gaining as well, markets are predicting good figures for France, Germany and other Euro Zone’s PMI data releasing on Tuesday.

GOLD, XAU
Despite optimism economy recovering, the market simultaneously bets on the safe-haven asset to be prepared for the second wave of Coronavirus. The demand for XAU makes it spiked high last Friday and this Monday morning.

USD Dollar Index (DXY) declined to 97.55 from last week’s height of 97.72

USD/CNY rose to 7.0777 from last week’s lowest of 7.0683

USD/JPY recovered to 106.866 from last week’s lowest of 106.666

EUR/USD rose to 1.11922 from last week’s lowest of 1.11683

AUD/USD rose to 0.68542 from last week’s lowest of 0.67765

NZD/USD rose to 0.64224 from last week’s lowest of 0.63808

GBP/USD recovered to 1.23733 from last week’s lowest of 1.23421

XAU/USD shot to 1753.175 from last week’s lowest of 1726.861

Data from Tradingview.com

Sources:

<https://www.investing.com/news/forex-news/dollar-holds-gains-as-fear-of-renewed-pandemic-gathers-pace-2208128>
< http://forex.cnfol.com/zhuanjiajianyi/20200622/28228322.shtml>
< https://www.forex.com/en/market-analysis/latest-research/weekly-update/>
<https://www.reuters.com/article/us-health-coronavirus-inflation-analysis/inflation-dog-may-finally-bark-investors-bet-idUSKBN23S09E>