Daily Market Commentary 28th July 2020

It was a soft opening for markets this week, as a ‘second wave’ of the virus hits Spain and the UK slams quarantine restrictions on travellers. The spike in virus cases in Spain has been also been reflected in other European nations, so apprehensive markets remain nervous. US/China tensions are on the rise, damaging global trade sentiment, after the Chinese retaliated to the closure of their Texas Consulate. The US Consulate in Chengdu, China has been forced to close down and rising tensions now threaten to spill over in to global trade.

The US Dollar beat a retreat, with the EUR surging to 1.1750, while the Yen spike to 105.30! Nervous markets drove the Gold price higher, jumping to USD$1,930, assisted by the weaker reserve. US Durable Goods orders improved by 7.3%, inline with expectations, while markets await a US stimulus package from Congress. The retreat of the Dollar sparked another rebound in commodity currencies, with the AUD trading 0.7135, while the NZD jumped to 0.6670.

The threat of the second wave of the virus remains a brake on economic recovery, as re-opening is restricted, from Melbourne to the US and Europe. The surging commodity currencies remain extremely vulnerable to US/China trade tensions and an escalation, must impact these trade exposed economies and currencies.