Daily Market Commentary 7th August 2020

The Bank of England left rates unchanged and reviewed economic contraction forecasts lower, from a 14% contraction to 9.5%. This was positive news, in these dire pandemic times, but the Bank of England Governor warned against optimism. Andrew Bailey outlined improved growth forecasts, but denied the ‘V-shaped’ recovery and set out a recovery program that would take more than a year. The GBP continued to rally, trading up to 1.3140, while the EUR moved up to 1.1870. German Factory Orders expanded by a massive 27.9%, as markets closely watch the pandemic for guidelines to the  European economy re-opening.

US Weekly Jobless Claims beat expectations, while the Challenger Jobs Report revealed a jump in job cuts. The all important Non Farm Payrolls will be released tonight and is expected to add more than 1.2 million jobs. US markets continue to monitor the Congressional impasse over a further fiscal stimulus package and the second wave of the virus. It appears the second wave is contained and mortality rates are plunging. The Dow reacted positively and rallied, adding further gains to a strong week.

Risk appetite is on the improve and has allowed the reserve to soften, pushing the AUD up to 0.7225, while the NZD broke back above 0.6650.