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.
US and Chinese tensions are on the rise again after an announcement from the US President that Tik Tok and WeChat would be canned in the US. In 45 days’ time all US residents would be banned from doing any business with the two companies. The US Dollar rebounded Friday with jobs data coming in above expectations, the safe haven demand preferred as China/US headlines regarding Trump’s comments disrupted markets and sent risk products lower.
The main event this week is the RBNZ announcement and policy statement. The RBNZ will be under pressure to increase its bond buying programme (LSAP) from 60B to 90B with the aim of injecting further money into the economy and lowering borrowing costs to businesses and households. Expect the RBNZ to therefore be dovish. We could get comments around the possibility of entering into negative rates, but this could be some way off as it needs the readiness of local banks to be onboard.
Major Announcements last week:
NZ Unemployment Rate published at 4.0% in July (5.6% expected) down from 4.2% in June
Bank of England left rates unchanged at 0.10%
Canadian Unemployment dropped to 10.2% from 11.1% in June
NFP released better than expected at 1.76M vs 1.53M surprising markets