Daily Market Commentary July 6th 2020

US Markets were closed Friday, for a shortened Independence Day holiday weekend, but booked some solid gains after strong employment data. Non Farm Payrolls added 4.8 Million jobs, for the month, and the previous month was revised higher! The strong data was reflected in the headline Unemployment number, plunging to 11.1%, from 13.3%. These are all huge historical records and confirm the much vaunted ‘V-shaped’ recovery.

The Dollar remained steady, with the EUR trading 1.1250, while the GBP climbs towards 1.2500. European markets were softer, to close out their trading week, due to fears over the spike in US coronavirus cases. The week ahead is light on major international economic data releases, but there will be no shortage of market action. The virus could be the major driver, while the macro-risk remains China and the fallout from their aggressive Geo-Politics.

China is facing domestic protests from Hong Kong citizens, after passing legislation reducing the Autonomy in the previously British territory, while international pressures come to bear. The US, UK and Australia are all offering protests, sanctions and sanctuaries. This international dispute could devolve quickly and has the potential to disrupt global trade and supply chains.

The trade risks and the virus ‘control and containment’, remain major risks to bullish markets, especially the trade exposed commodity currencies, while the RBA will announce this week. The AUD closed the week at 0.6940, while the NZD trades 0.6530, after strong gains tinged with vulnerability.