Coronavirus Still Dominating Markets – Currency Thoughts

Coronavirus Still Dominating Markets

June 29, 2020

Over the weekend, the global coronavirus case and death counts went over 10 million and half a million, respectively. Compared to Friday at this time, there has been an increase of 132k and 1,653 in U.S. identified cases and deaths attributed to Covid-19. Florida and Texas are struggling.

Polish President Duda failed to capture a large enough share of Saturday’s vote to win outright and will face off against Trzaskowski in a run-off election on July 12.

The dollar opened the week on a mildly softer note. Among other key currencies, a 0.3% rise against sterling was the dollar’s only advance.

Stock markets fell in major Pacific Rim countries, with losses of 2.3% in Japan, 1.9% in South Korea, 1.5% in Australia, 1.4% in New Zealand, 1.2% in Singapore, 1.0% in Taiwan and Hong Kong but just 0.6% in China.

European stock markets are higher, by contrast, but gains are less than 1.0%.

There’s been scant change in 10-year sovereign debt yields.

Among commodities, the prices of WTI oil and Comex gold are up 0.4% and 0.3%.

The approach of quarter-end means a heavy flow of released data. The most significant of today’s reported indicators so far has been June economic sentiment in the euro area, which rose but not quite as much has hoped. At 75.7, June’s economic sentiment reading represents a 3-month high but was only 10.9 points above April’s record low and 27.7 points shy of the first-half high hit in February. Key sectors like industry, services, retail and construction posted 3-month highs, and so did the measure of consumer confidence.

Japanese retail sales bounced 2.1% higher in May after dropping 4.3% in March and 9.9% in April. This left sales 12.3% below their year-earlier level.

Switzerland’s current account surplus of CHF 17.4 billion in the first quarter was the smallest since the final quarter of 2018 and compares with a quarterly average surplus last year of CHF 20.2 billion.

Mortgage approvals in Great Britain dropped 41% on month in May, but mortgage lending rose somewhat.

Regional CPI inflation data in German suggest a moderate acceleration in June that will alleviate some concern. Sure enough, the preliminary inflation estimate for all of Germany returned to April’s 0.9% from 0.6% in May. By comparison, the rate was 1.7% back in January-February.

Spanish CPI inflation was less negative this month (-0.3%) than in May when such bottomed at -0.9%. Similarly, Belgian CPI inflation rose to a 3-month high of 0.6% in June.

Dutch business confidence jumped 10 index points to -15.1 in June and was the best since March. Confidence had plunged 28.9 points to a record low in April.

Austrian business sentiment printed at a 3-month high of -20.3 in June. Such has been lower than zero in every month of the first half of 2020. So has consumer confidence, which also climbed to a 3-month high in June (-8.3).

Finnish business confidence in June matched May’s value of -24, which marked the weakest reading since 2009. Finnish consumer sentiment, however, improved to an 11-month high of -3.9 in June from -9.0 in May.

Danish business sentiment rose 10 index points to -16 this month, which marks a 3-month high.

Portuguese business sentiment sank to a record low in June, and consumer confidence in that economy fell to a 78-month low.

Greek business and consumer sentiment improved in June to 2- and 3-month highs of 87.6 and -27.7. Back in February, these indices printed at 113.2 and -4.8.

Irish retail sales rebounded 29.5% in May but remained 26.6% weaker than a year earlier.

Likewise, Portuguese retail sales were 13.1% lowr than in May 2019 despite a 13.1% increase last month.

Sweden recorded a SEK 37.1 billion trade surplus in January-May, more than double the surplus of SEK 17 billion a year earlier.

In Hong Kong, imports recorded a larger on-year drop of 12.3% last month versus an export fall of 7.4%. As a result, the trade deficit narrowed 60.4%.

At 66.77, Taiwanese consumer confidence barely rose in June above May’s 10-1/2 year low of 64.87.

Corporate profits in China during January-May were 19.3% lower than a year earlier.

Canadian PPI inflation was less negative in May (4.9%) than in April (-6.6%), reflected to a big extent as in other economies the recovery of oil costs.

U.S. monthly pending home sales and the Dallas Fed manufacturing index will be reported later today.

Tuesday sees an even larger deluge of data reports around the world than released today.

Copyright 2020, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: coronavirus cases, Euroland economic sentiment, German CPI, Swiss current account


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