Daily Market Commentary July 8th 2020

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Surging global equity markets took a breather overnight, as consideration was given to the virus outbreaks in the Southern States of the USA and a flare up in Melbourne. The viral out-breaks are starting to impact the economies, as the authorities start to re-impose restrictions, as seen in Melbourne. Melbourne has seen a big flare up and has since put the Melbourne Metro area into another 6 week lockdown. The economic impact could be dramatic, for already fragile small business?

The GBP continued to post gains, trading 1.2550, while the EUR fell below 1.1300, following a less than impressive German Industrial Production number. The RBA left rates unchanged and warned of an uncertain future, as the economy is suffering the worst economic contraction since the Great Depression. The AUD was slightly softer, trading 0.6950, while the NZD clings to 0.6550. NZ Business Confidence was in the doldrums, contracting minus 63, but was a slight improvement on the devastatingly low number the previous month. Dairy prices continue to hold up reasonably well, which is a tenuous life-line, but these commodity currencies remain vulnerable.

The Chinese Geo-Political actions may well translate into global reactions which will impact the existing global supply chain. This would have a dramatic effect on commodity currencies.

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