FX News

Worldwide coronavirus cases surpass 22.84 million with over 796,000 official deaths.

US Dollar safe haven buying was back on the agenda Thursday after the Federal Reserve Minutes released. The Federal Reserve released minutes from the July 28th meeting acknowledging officials expected greater support in the fight for economic recovery from Covid-19. The Fed believed the economy should return to normal over the next “few” years- hinging on optimism that additional measures by the government with efforts to support incomes and spending. The minutes showed that subtle changes from the previous minutes highlighted the willingness of fed participants to “sharpen” their policy at the next meeting on September 15th. There was little objection from members that the pandemic would continue to weigh heavily on the economic outlook with risks in employment and inflation the greatest concerns.

Worldwide coronavirus cases surpass 22 million with over 774,000 official deaths.

NZ has postponed its national election by 4 weeks to the 17th October. 

Markets went into the weekend trading flat, not really bothered about attacking any one direction, risk conditions were subdued. The weekly winner was the Canadian Dollar, by far the strongest currency outperforming its main peers based on a pickup in data and higher crude prices. The Weakest currency was the New Zealand Dollar edging out the Japanese Yen based on a recently dovish RBNZ. Coronavirus still occupies headlines around the world with the virus still unable to be contained in many countries. In the US they are still averaging over 50,000 new cases every day. NZ has a fresh outbreak with authorities stretched to limit further spreading into the wider community. 

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Tuesday 18/08

• 130pm, AUD, Monetary Policy Meeting Minutes 

Wednesday 19/08

• All Day, All, OPEC-JMMC Meetings

Worldwide coronavirus cases surpass 21.08 million with over 753,000 official deaths.

New Zealand has locked down Auckland after a run of 102 days without community infection. Auckland recorded 4 new community spread cases Wednesday of coronavirus, locking down the city for 3 days from midday Wednesday. The 4 cases are all from the same family. Prime Minister Ardern was swift to bring in level 3 late Wednesday night with the rest of NZ in lockdown level 2. The issue authorities have is the 4 new cases are from an unknown source and work is being done to trace where the virus originated. New Zealanders will find out later today if the country/Auckland will stay in level 3 lockdown or go into a stricter level 4 from tomorrow. Meanwhile National leader Judith Collins has called for the 19 September election to be postponed due to new outbreak concerns.

The Reserve Bank of New Zealand kept the Cash Rate unchanged at 0.25% today and increased its asset purchase program. The (LSAP) Large Scale Purchase Program has been expanded from 60 Billion to 100Billion NZD. Buying more LSAP enables the RBNZ to keep downward pressures on wholesale and retail rates. This is a significant boost as estimates had been between 75B and 90B. The RBNZ also agreed that additional monetary instruments remain active such as the deployment of negative interest rates and possible purchase of foreign assets. Implementing these tools will depend largely on the outlook for inflation and employment. 

Worldwide coronavirus cases surpass 20.23 million with over 737,000 official deaths.

The US economy added 1.8M jobs in the month of July, indicating a recovery of sorts even though they have experienced a surge in coronavirus over the summer months. The 1.8M was slower than the prior two months when roughly 2.5M in May and 4.8M in June were added with many states lifted coronavirus lockdown restrictions. The official unemployment rate fell to 10.2% after peaking at 14.7% in April highlighting people are returning to work with the greatest number of people returning to the hospitality, retail, government and Health Care sectors. This marks a fairly decent rebound but following a hefty downturn which skews the figures somewhat. It will still take until 2022 for the economy to fully recover according to reports, depending on how quick a vaccine is introduced to the masses. Remembering the US economy was at its lowest unemployment rate of 3.5% in 50 years pre coronavirus. The US economy entered a recession in February and has shown a decent comeback as early as April, but the speed of the ongoing recovery will depend on the course of coronavirus. The government wage subsidy of $600.00 per week expired at the end of July and congress has not managed to agree on its next steps, although President Trump has over the weekend signed presidential orders to expand the unemployment benefit scheme, defer taxes and provide student loan relief.

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Monday 10/08

• All Day, JPY, Bank Holiday

Wednesday 12/08

• 2pm, NZD, Official Cash Rate
  • Forecast 0.25%
  • Previous 0.25%
• 2pm, NZD, RBNZ Monetary Policy Statement
• 2pm, NZD, RBNZ Rate Statement
• 3pm, NZD, RBNZ Press Conference
• 6pm, GBP, Prelim GDP q/q
  • Forecast -20.50%
  • Previous  -2.00%

Worldwide coronavirus cases surpass 19.2 million with over 716,000 official deaths.

Analysts overwhelmingly ignored Wednesday’s New Zealand Unemployment rate when it published at 4.0%, down from the 5.5% markets were predicting. Putting it down to a large margin of error based on inadequate statistical data over the second quarter. I suppose due to the lockdown in April and some of May those unemployed couldn’t look for work thus weren’t included in the figures. April was the worst month when 35,000 filed for unemployment benefits followed by May’s turnaround increase of 14,400 jobs and further increases in June, almost putting the quarter back to pre- covid levels. The problem is this, the wage subsidy was in place for nearly all of the March, April and May (second quarter) of which the NZ government paid out a total of 13 Billion in wages to individuals and businesses.

Worldwide coronavirus cases surpass 17.36 million with over 695,000 official deaths.

New Zealand unemployment numbers print this week on Wednesday and are expected to show that the rate will jump from 4.2% to around 5.0% for the second quarter. If we stop and think about this for a second, this number is a monumental achievement for the NZ economy in light of recent and ongoing coronavirus. The new Statistics NZ labour force indicator confirms these extraordinary numbers with jobless claims hitting a high in April of 35,000 and the June number which released last week reflecting that filled jobs had recovered almost all of the prior decline. The result is a resoundingly positive result for the country as businesses and individuals have mostly returned to work. The main reason for the labour force’s resilience has been the government’s wage subsidy program with 1.7M employees covered by the scheme. The wage subsidy extension ends on the 1st of September 2020 which will no doubt influence 3rd quarter jobs figures and unemployment after the program has finished.  

Tuesday 04/08

• All Day, CAD, Bank Holiday 
• 2am, USD, ISM Manufacturing PMI
  • Forecast 53.6
  • Previous 52.6
• 430pm, AUD, Cash Rate
  • Forecast 0.25%
  • Previous 0.25%

Wednesday 05/08

• 1045am, NZD, Employment Change q/q
  • Forecast -2.00%
  • Previous 0.70%
• 1045am, NZD, Unemployment Rate
  • Forecast 5.50%
  • Previous 4.20%