FX News

Covid 19 Back on the Menu

Worldwide coronavirus cases surpasses 9.18M with over 474,000 deaths officially reported.

Risk sentiment looks to be back dominating play both directions as market participants start to digest the possibilities of second wave coronavirus around the world and its implications on economies now and long term. One could argue that we are not yet out of wave one with global statistics still showing an alarming 20,000 plus cases popping up every day.  News out of Beijing China doesn’t look good after the virus was all but gone on the 9th of June with the last infected case being released from hospital, now they have over 200 cases with hundreds of flights cancelled, schools closed and residential facilities back in strict coordinated lockdown. As with the Wuhan outbreak the situation in Beijing seems to be fairly well managed, the same cannot be said for parts of the US with some states -Florida and Arizona along with California all have new cases rising exponentially. Countries like Brazil, India, Peru and Chile have all experienced a flood of new cases in the last few days, including our friends in Victoria (Australia). All this adds up to a pessimistic market tone falling in line with more distancing restrictions being ratcheted up around the globe. 

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FX News

Economic Releases

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Monday 22/06

  • 11am, AUD, RBA Gov Lowe Speaks

Tuesday 23/06

  • 3am, CAD, BOC Gov Macklem Speaks
  • 715pm, EUR, French Flash Services PMI
    • Forecast 44.9
    • Previous 31.1
  • 730pm, EUR, German Flash Manufacturing PMI
    • Forecast 41.5
    • Previous 36.6
  • 730pm, EUR, German Flash Services PMI
    • Forecast 41.7
    • Previous 32.6
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Direct FX

FX Update

Worldwide coronavirus cases surpasses 8.5M with over 455,000 deaths officially reported.

The New Zealand economy shrank by 1.6% in the January to March 2020 quarter, or roughly 310B New Zealand Dollars ending 9 years of growth. Expectations were the economy to shrink by 1.0% in the first quarter missing the mark. Predictions are for the economy to contract around 14.0% in the second quarter. This will mark a formal drop into recession when figures release on 18 September. Compared to first quarter 2019 the economy was down 0.2% y/y but actually grew by 1.5% in the year ending 31 March 2020. Figures show that this is the first contraction in growth since the third quarter of 2009 and the largest first quarter contraction in 29 years highlighting the horrific economic impact coronavirus has and will continue to have on the country’s growth.

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Howard Wilcox

Second wave coronavirus concerns affect mood

Worldwide coronavirus cases surpasses 8M with over 435,000 deaths officially reported.

The Japanese Yen closed the week earning the top spot, beating out all other major currencies as “risk trade action” fades and sends investors and traders away from risk assets. We also saw better economic data out in Japan potentially supporting the Yen over the week. We saw a strong bounce in US Dollar performance with market reaction to shifts towards a dovish economic outlook by the Federal Reserve, reports of more clusters of coronavirus appearing around the US are also weighing in. Several months back we were talking about a possible V shaped economic global comeback/recovery meaning the economic impact would be deep but bounce back hard.

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Economic Releases

Economic Releases

Tuesday 16/06

  • Tentative, JPY, Monetary Policy Statement
  • 6pm, GBP, Claimant Count Change
    • Previous 856.5k

Wednesday 17/06

  • 1230am, USD, Core Retail Sales
    • Forecast 5.50%
    • Previous -17.20%
  • 1230am, USD, Retail Sales m/m
    • Forecast 7.40%
    • Previous -16.40%
  • 2am, USD, Fed Chair Powell Testifies
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Howard Wilcox

Market Update

Day 23-  Level 2 NZ lockdown.

Worldwide coronavirus cases surpasses 6,400,000 with over 380,000 deaths officially reported.

A string of terrible American data releases has worn down the US Dollar recently with the US Dollar Index falling to below 98.00 Wednesday. Unemployment numbers continue to rise with another 2.1M people filing for unemployment. Prelim GDP for the first quarter 2020 was down -5.0% and the University of Michigan Consumer Sentiment index took a hiding. Equity gains in Europe extended to US markets despite the ongoing trade tensions between the US and China and civil unrest from the death of George Floyd. Risk sentiment has been unfaltering, improving sharply Friday after President Trump’s threats to China regarding the situation in Hong Kong. Poor vaccine trials are also hitting the wires but have had little effect on the rise of the New Zealand Dollar and the Australian Dollar over the past few days. It could be said that with only 1 person in NZ recovering from the virus at the moment and very few new cases out of Australia both countries are starting to be seen as safe haven assets. Further unrest in the US with Trump threatening to mobilise the National Guard to confront protesters, and general wide scale unemployment with alarming numbers of new coronavirus numbers should see market conditions and sentiment remain low in the USA for a while with a US recovery looking a long way off. 

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Markets Update

Day 10-  Level 2 NZ lockdown.

Worldwide coronavirus cases surpasses 5,900,000 with over 361,000 deaths officially reported.

New Zealand Job numbers fell by a record 37,500 in April showing the fallout of lockdown throughout most of April and the impact of Covid-19. This represents the largest drop since records began in 1999. The biggest decline was in the service and primary industries with significant drops in accommodation and food services. The alarming aspect of these numbers is that we won’t know the true extent of the damage to the economy until well after the wage subsidy ends with a further dire outlook to transpire. In recent weeks we have seen many large companies chop jobs such as Air New Zealand, Fletcher Buildings, Sky City and Copthorne Hotels with the Reserve Bank of New Zealand expecting the unemployment rate to top out at 10.0% by the end of 2020.

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