Daily Market Commentary 23rd of June 2020

The Chicago Fed National Activity Index turned positive overnight, one of the few major economic data releases, allowing markets to focus on the economic recovery. The re-open is charging along at a great pace in the USA, while the rise in viral infection, is explained by the increase in testing. The US is experiencing a ‘V-Shaped’ recovery in the stock markets, which is always a predicter of the future. The rising confidence allowed the US Dollar to settle, with the EUR climbing to 1.1250, while the GBP rebounded to 1.2460.

The German Bundesbank commented on the recovery in Germany. They recognised that Germany was past the low point, but restrictions were being lifted slowly, so expectations are for only a gradual recovery. The RBA Governor Lowe was also out in the media, confirming the Australian economy was outperforming, but the caveat was fast to follow, that the shadow of the virus could last for years. He noted the strong performance of the Australian Dollar, boosted by the success of the countries management of the pandemic, although he would prefer it lower to assist the recovery. He also urged the Government to use the opportunity to implement long-term structural economic reform. The AUD rallied back above 0.6900, while the NZD also gained on the softer reserve, rising to 0.6480.

Economic data releases will continue to improve as global economies re-open. The threats remain the Chinese and their aggressive Geo-Political activities and the impact this will have on global trade.