Weekly Market Commentary 10th August 2020

US Non Farm Payrolls beat expectations Friday, chalking up 1.763 million jobs, pushing the headline Unemployment rate back to 10.2%!, The number was a good one, but the shine was taken off the strong labour number, due to rising US/China tensions. President Trump signed an executive order banning ‘WeChat and TikTok’ in 45 days, which is a big escalation in US/China trade relations. The Trump administration also announced sanctions on the Hong Kong CEO and China agent, Carrie Lam. Tensions are on the rise and along with the global pandemic, remain the biggest threat to global markets.

German Industrial Production jumped 8.9%, boosted by a 14.9% spike in exports to China, who themselves recorded large gains in export trade. These are strong indicators for the global economy but the rising Geo-Political tensions, promoted risk-off sentiment. The Dollar regained some upward momentum, with the EUR falling to 1.1750, while the GBP plunged to 1.3050.

The rising reserve and US-China trade tensions took the shine off the recently boisterous commodity currencies, with the AUD falling back to 0.7150, while the NZD dipped below 0.6600. The coming week will be dominated by the pandemic and the impact on global economies, while the escalating tensions between the US and China could have a big influence.