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Japan: Tokyo Consumer Price Index, y/y, June 0.3% (forecast 0.6%)
Japan: Tokyo CPI ex Fresh Food, y/y, June 0.2% (forecast 0.2%)
Schedule for tomorrow, Friday, June 26, 2020
Time Country Event Period Previous value Forecast
06:45 France Consumer confidence June 93 95
08:00 Eurozone Private Loans, Y/Y May 3% 3.2%
08:00 Eurozone M3 money supply, adjusted y/y May 8.3% 8.6%
12:30 U.S. PCE price index ex food, energy, Y/Y May 1% 0.9%
12:30 U.S. Personal spending May -13.6% 9%
12:30 U.S. PCE price index ex food, energy, m/m May -0.4% 0%
12:30 U.S. Personal Income, m/m May 10.5% -6%
14:00 U.S. Reuters/Michigan Consumer Sentiment Index June 72.3 79
17:00 U.S. Baker Hughes Oil Rig Count June 189  
DJIA +0.06% 25,460.39 +14.45 Nasdaq +0.07% 9,916.26 +7.10 S&P +0.11% 3,053.54 +3.21
European stocks closed: FTSE 100 6,147.14 +23.45 +0.38% DAX 12,177.87 +83.93 +0.69% CAC 40 4,918.58 +47.22 +0.97%
NZD/USD to remain strong around 0.65 through into 2021 - ANZ

FXStreet notes that the kiwi is expected to remain stubbornly strong for the rest of the year as enjoys the upbeat market mood following New Zealand’s success against coronavirus. Therefore, economists at ANZ Bank expect NZD/USD to trade near the 0.65 level in the coming months.

“Kiwi has found more support in the current market environment than we were anticipating. Partly it reflects the good news that we beat back Covid-19 and so are in a better position than most, but it is not good news for farmers as overseas returns are eroded by a stronger NZD in farmgate terms.” 

“We no longer anticipate a significant fall in the NZD in the months ahead. We now anticipate the NZD/USD pair will maintain a value of near 0.65 through into 2021.”

U.S.: The lay-offs keep coming - ING

James Knightley, the Chief International Economist at ING, notes that U.S. weekly jobless claims are not falling as quickly as they should in an environment of businesses re-opening, suggesting significant ongoing economic stress. 

"Initial jobless claims have come in at 1.48 million for the week of 20 June versus the consensus forecast of 1.32mn and a reading 1.508mn from the previous week. It is the 14th consecutive week of claims above 1 million with today’s figure still more than double the worst number recorded during the global financial crisis (665,000 on 27 March 2009)."

"Continuing claims data fell to 19.5mn for the week of 13 June from 20.3mn. This was better than expected, but we would caution that it is rather choppy and could move higher once again next week."

"Moreover, the total number of people claiming benefits in all programmes for the week ending 6 June was 30,553,817, an increase of 1,294,309 from the previous week."

"This means more than 20% of the workforce were claiming benefits in the first week of the month, well above the 13.3% “official” unemployment rate published by the Bureau for Labour Statistics."

"With the number of Covid-19 cases clearly on the rise in many states we also have to be alive to the risk of containment measures being reinstated, which would add to economic stress and the risk of further lay-offs – consumer could of course vote with their feet if virus fears are not brought under control. Then with the US$600 boost to weekly unemployment benefits scheduled an end on 31 July, we may be about to enter an uncertain period for household incomes and, by extension, consumer spending. The pressure will undoubtedly build for additional fiscal support in the next few weeks, otherwise forecasts for the 2H20 rebound may well need to be scaled back."

Dallas Fed president Kaplan: U.S. economic performance hinges on health response

  • Says Fed policy no substitute for good healthcare response
  • Sees 35-40% annualized GDP contraction in Q2

White House adviser Kudlow: U.S. economy is not going to be closed down again

  • Coronavirus spikes and hot spots will lead to shutdowns in certain places
  • Still expecting a strong V-shaped economic recovery

ECB's Executive Board member Mersch: PEPP must remain a temporary crisis instrument

  • We would not need to make full use of PEPP if governing council determined that market tension had eased sufficiently
  • We are mindful that size of our balance sheet can have implications for market functioning and price formation
  • The sheer size of PEPP also goes beyond its primary backstop function by providing additional support to the monetary policy stance

U.S. durable goods orders surge more than forecast in May

The U.S. Commerce Department reported on Thursday that the durable goods orders climbed 15.8 percent m-o-m in May, following a revised 18.1 percent m-o-m plunge in April (originally a 17.2 percent m-o-m decline). This was the biggest gain in durable goods orders since July 2014.

Economists had forecast a 10.9 percent m-o-m jump.

According to the report, orders for durable goods excluding transportation rose 4.0 percent m-o-m in May, following a revised 8.2 percent m-o-m tumble in April (originally a drop of 7.4 percent m-o-m), exceeding economists’ forecast of 2.5 percent m-o-m gain.

Meanwhile, orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, increased 2.3 percent m-o-m in May after a revised 6.5 percent fall m-o-m in April. Economists had called for a 1.0 percent m-o-m advance in core capital goods orders in May.

Shipments of these core capital goods rose 1.8 percent m-o-m in May after a 6.2 percent m-o-m drop in the prior month.

U.S. Stocks open: Dow -0.39%, Nasdaq +0.04%, S&P -0.17%
Gold sticks to the positive outlook - UOB

FXStreet reports that strategists at UOB Group’s Quarterly Global Outlook noted the precious metal could advance to the key $1,800 mark per ounce in early 2021.

“Amidst the uncertain economic times, gold is probably the only key commodity with a distinctive and clear positive outlook. All the key positive drivers remain in place. Global central banks continue their massive monetary policy easing, providing a strong and steady tailwind for gold. Adding to the tailwind, safe haven allocation demand remains strong amidst the on-going economic uncertainty. As such, the question for gold is not one of whether the recent strength is sustainable? This more pertinent question for gold is how strong the rally will be?.”

“Overall, we maintain our medium to longer-term gradual positive outlook for gold. We forecast gold at USD 1,700 / oz in 3Q20, USD 1,750 / oz in 4Q20, USD 1,800 / oz in 1Q21 and USD 1, 850 / oz in 2Q21.”  

Before the bell: S&P futures -0.61%, NASDAQ futures -0.11%

U.S. stock-index futures fell on Thursday as investors weighed disappointing weekly jobless claims data and an acceleration in new coronavirus cases in major economies around the world. 

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Target price changes before the market open

Apple (AAPL) target raised to $425 from $375 at Wedbush

Downgrades before the market open

Boeing (BA) downgraded to Sell from Hold at Berenberg; target $150

Upgrades before the market open

DuPont (DD) upgraded to Outperform from Sector Perform at RBC Capital Mkts; target raised to $66

U.S. economy shrinks as previously estimated in Q1

A report from the Commerce Department showed on Thursday the U.S. economy contracted as initially estimated in the first quarter of 2020, as an upward revision to nonresidential fixed investment was offset by downward revisions to private inventory investment, personal consumption expenditures (PCE), and exports.

According to the “third” estimate, the U.S. gross domestic product (GDP) decreased at a 5.0 percent annual rate in the first quarter, as reported in the "second" estimate. This was the biggest drop in GDP since the fourth quarter of 2008

Economists had expected the decline rate to remain unrevised at 5.0 percent.

In the fourth quarter of 2019, the economy expanded by 2.1 percent.

The decrease in real GDP in the first quarter reflected negative contributions from PCE, private inventory investment, exports, and nonresidential fixed investment that were partly offset by positive contributions from residential fixed investment, federal government spending, and state and local government spending. Meanwhile. imports, which are a subtraction in the calculation of GDP, fell. 

U.S. weekly jobless claims total 1.480 million

The data from the Labor Department revealed on Thursday the number of applications for unemployment reduced last week to the lowest level since the U.S. economy went into lockdown made to fight the COVID-19 pandemic, but still remained high.

According to the report, the initial claims for unemployment benefits totaled 1,480,000 for the week ended June 20. That brings the number of job losses over the past fourteen weeks (since the U.S. went into coronavirus lockdown in mid-March) to more than 47.2 million.

Economists had expected 1,300,000 new claims last week.

Claims for the prior week were revised upwardly to 1,540,000 from the initial estimate of 1,508,000.

Meanwhile, the four-week moving average of claims fell to 1,620,750 from a revised 1,781,500 in the previous week.

Continuing claims decreased to 19,522,000 million from a20, revised 289,000 in the previous week.

European session review: EUR weakens as investors weigh acceleration in new coronavirus cases and ECB minutes

TimeCountryEventPeriodPrevious valueForecastActual
10:00United KingdomCBI retail sales volume balanceJune-50-34-37
11:30EurozoneECB Monetary Policy Meeting Accounts    
12:30U.S.Goods Trade Balance, $ bln.May-70.73 -74.34
12:30U.S.Continuing Jobless ClaimsJune202891996819522
12:30U.S.Durable Goods Orders May-18.1%10.9%15.8%
12:30U.S.Durable goods orders ex defenseMay-17.1% 15.5%
12:30U.S.Durable Goods Orders ex Transportation May-8.2%2.5%4%
12:30U.S.Initial Jobless ClaimsJune154013001480
12:30U.S.PCE price index ex food, energy, q/qQuarter I1.3%1.6%1.7%
12:30U.S.PCE price index, q/qQuarter I1.3%1.2%1.3%
12:30U.S.GDP, q/qQuarter I2.1%-5%-5%

EUR fell against its major counterparts in the European session on Thursday as investors grappled with worries about possible reimposition of lockdown measures to slow coronavirus spread and fresh trade concerns.

Data continues to show an acceleration in new coronavirus cases in major economies around the world. According to the Johns Hopkins Center for Systems Science and Engineering, the total number of confirmed global cases of the COVID-19 rose to 9,453,673, with the U.S. recording 2,381,369 coronavirus cases, the most in the world. 

Yesterday's reports that the U.S. wants to impose new tariffs on $3.1 bln worth of imports from the EU and the UK also continued to weigh on market sentiment.

In addition, investors assessed the minutes from the ECB's latest meeting. The policymakers noted that the monetary policy measures and a fiscal response had reduced downside tail risks, and heightened its readiness to adjust the full range of its instruments, including TLTROs, policy interest rates and forward guidance.

Markets also continued to expect the European leaders to reach a compromise or agreement on the recovery fund. The EU heads are set to meet in Brussels on July 17-18 to discuss the EU recovery plan and long-term budget.

U.S.: PCE price index ex food, energy, q/q, Quarter I 1.7% (forecast 1.6%)
U.S.: GDP, q/q, Quarter I -5% (forecast -5%)
U.S.: Continuing Jobless Claims, June 19522 (forecast 19968)
U.S.: PCE price index, q/q, Quarter I 1.3% (forecast 1.2%)
U.S.: Goods Trade Balance, $ bln., May -74.34
U.S.: Initial Jobless Claims, June 1480 (forecast 1300)
U.S.: Durable goods orders ex defense, May 15.5%
U.S.: Durable Goods Orders ex Transportation , May 4% (forecast 2.5%)
U.S.: Durable Goods Orders , May 15.8% (forecast 10.9%)
AUD/USD: Clearance of tough resistance at 0.6977 to test 0.7032 - Credit Suisse

FXStreet reports that AUD/USD remains capped by the key resistance at 0.6977 but after a consolidation phase, analysts at Credit Suisse expect the aussie, which stages a modest intraday recovery of 0.15%, to test the 0.7032 level.

“AUD/USD remains in a tight range as the market has not managed to break above the pivotal price resistance at 0.6977. We keep our view unchanged and we expect further upside to unfold post this consolidation phase. Removal of the 0.6977 mark would see a minor base established to reinforce this view. Resistance is seen thereafter at 0.7005, removal of which would see a renewed test of 0.7032/41 and 0.7063.” 

“An eventual break above 0.7063 would see a larger base established and add weight to the view of a broader change in trend to the upside, with resistance seen next at the July 2019 high and 78.6% retracement of the 2019/2020 fall at 0.7082/92, where we would expect to see another initial pause.” 

“Support is seen initially at 0.6851/36, where we expect to see fresh buyers at first. Beneath here would see support next at 0.6777/75, which ideally holds to keep the immediate upside bias intact.”

ECB Monetary Policy Meeting Accounts: Governing Council is ready to adjust full range of its instruments, including TLTROs, policy interest rates and forward guidance

The ECB released account of its June 3-4 monetary policy meeting. It noted that:

  • ECB’s monetary policy measures, together with the Franco-German recovery fund proposal, which was subsequently broadly taken up in package proposed by European Commission, had reduced downside tail risks for euro area;
  • Broad-based decline in risk premia had offset the tightening impact of deterioration in macroeconomic fundamentals;
  • The latest easing of financial conditions in euro area in part hinged on the contribution of fiscal and monetary policy to mitigating fragmentation risks across markets and jurisdictions;
  • Survey data and real-time indicators for economic activity had shown some positive signs as containment measures were gradually eased. Nonetheless, these readings indicated only minor improvement compared with speed at which indicators had plummeted in preceding two months;
  • PEPP [pandemic emergency purchase programme] was a measure which was proportionate to counter the serious risks to price stability, the monetary policy transmission mechanism and the economic outlook in the euro area, which are posed by the outbreak and escalating diffusion of COVID-19;
  • It was argued that the proportionality assessment of any monetary policy measure had to consider, among other things, the degree to which the measure contributed to achieving the monetary policy objective;
  • The PEPP and the APP were proportionate measures under the current conditions for pursuing the price stability objective;
  • It was highlighted that asset purchases were an essential tool with which monetary policy could affect macroeconomic developments;
  • There was now ample evidence that asset purchase programmes in general and PSPP in particular had proven effective in achieving their intended effects on euro area economy and thereby in maintaining price stability;
  • Although the quantitative estimates varied to some extent and were subject to usual model uncertainty, overall evidence underpinned view that PSPP had had positive impact on macroeconomic outcomes;
  • There was broad agreement among members that while different weights might be attached to benefits and side effects of asset purchases, negative side effects had so far been clearly outweighed by positive effects of asset purchases on the economy in the pursuit of price stability;
  • It could not be ruled out that unintended effects could increase over time and eventually outweigh the overall positive effects;
  • There was broad agreement among members to reiterate that Governing Council would do everything necessary within its mandate and that it continued to stand ready to adjust all of its instruments, as appropriate, to ensure that inflation moved towards the Governing Council’s aim in a sustained manner;
  • It needed to be highlighted that monetary and fiscal policies were increasingly complementing each other in current situation;
  • Governing Council continued to stand ready to adjust all of its instruments, as appropriate, to ensure that inflation moved towards its aim in sustained manner, in line with its commitment to symmetry

USD/CAD to reach 1.40 again, loonie unable to retain bullish momentum - CIBC

FXStreet reports that Avery Shenfeld from CIBC Capital Markets notes that the loonie rebounded from levels below the key 1.3500 psychological mark thanks to a turn in crude prices but such a move is not sustainable and expects USD/CAD to touch the 1.40 level. For year-end, the pair is forecast at 1.38.

“We’ve reduced our targets for C$ weakness ahead due to recovery in oil. However, we do not believe the Canadian dollar will be able to sustain that run, and will see 1.40 again at some point during this recovery.”

“Unlike the Eurozone or Japan, Canada entered this recession with a weak current account and trade balance, and the prior expansion’s lackluster growth in real exports suggests its overvalued on trade fundamentals.” 

“Canada’s overweight in energy points to a weaker 2020 starting point versus the US. Look for the Bank of Canada to pound home the message the output gap will remain wide over its full forecast horizon, implying a long wait for any move off near-zero rates, and helping to take some luster off the currency.”

“Q3 20: 1.39 | Q4 20: 1.38.”

ECB's Governing Council member Rehn on German court ruling on QE program: We have found "pragmatic, sensible" way to move forward without questioning independence of central bank
USD/JPY: Japan struggles to make use of the growth around it - Westpac

FXStreet reports that economists at Westpac are not upbeat regarding a yen appreciation as Japanese stimulus package is set to be scarce and the country will have troubles to benefit from Asian regions growth. Therefore, no changes are expected on the USD/JPY pair. 

“We have remained quite circumspect on the yen through 2020, and this is still the case. At the end-2021, we look for the yen to be little changed from today's spot level, JPY 107. This is despite the US dollar index depreciating 3.0% during this time, 2.5% in 2021, and, on our expectations, as the Asian region drives the rebound in global growth.”

“Behind our forecast for yen is an expectation that, in GDP terms, Japan will struggle to take advantage of the growth in the nations around it. Meanwhile, announced stimulus measures are likely to prove insufficient to quickly and sustainably stimulate domestic demand. Japanese investors are therefore likely to look off shore in pursuit of capital gains and income as global risks dissipate.”

NZD/USD: Removal of tough barrier at 0.6553 to test the 0.6584 June high - Credit Suisse

NZD/USD: Removal of tough barrier at 0.6553 to test the 0.6584 June high - Credit Suisse

FXStreet notes that NZD/USD has retracted from the pivotal 2014 downtrend at 0.6553, which is proving to be a major resistance. Nonetheless, analysts at Credit Suisse expect the kiwi to clear this level towards the 0.6584 June high.

“Although we expect the range bound environment to extend further for now and the 0.6553 level to remain a tough barrier to break, we eventually look for a break above here. We would then look for a fresh test of the current June high at 0.6584, where the market may take another breather, with only a sustained and closing break above here reinforcing thoughts of a broader change in trend to the upside, with resistance then seen at 0.6665.”

“Support is initially seen at 0.6399/94, then 0.6382/77, which ideally continues to hold. In contrast, a sustained close below here would now see a small top complete, with 0.6325/21 the next key support level to monitor and where we would expect to see another attempt to hold.”

Pace of decline of UK retail sales volumes slows slightly less than expected in June - CBI

The Confederation of British Industry (CBI) reported on Thursday its latest survey of retailers showed retail sales volume balance stood at -37 in the year to June, up from -50 in May, which marked another steep drop in sales. However, stronger growth for grocers and stable volumes in the specialist food and drink sector ensured a slower pace of decline than in May.

Economist had forecast the reading to increase to -34.

Retail sales volumes are expected to fall at a slightly faster pace in the year to July (-48), mostly reflecting slower growth for grocers and a decline in sales for specialist food and drink retailers.

The report also revealed that orders placed on suppliers continued to decrease in the year to June, albeit at a slower rate than last month, (-42 compared to -56 in May) and are expected to fall at broadly a similar rate in the year to July (-44).

Rain Newton-Smith, CBI Chief Economist, noted: “With high street shops, department stores and shopping centres re-opening across England last week amid some scenes of long queues, you’d be forgiven for thinking retailers’ difficulties are coming to an end. But the health of the retail sector remains in the balance.”

United Kingdom: CBI retail sales volume balance, June -37 (forecast -34)
WHO European regional director Kluge: Europe had first increase in weekly cases in 'a long time'

  • 11 European countries face a resurgence of the coronavirus

  • Cases are accelerating in 30 countries across Europe

  • Most European countries are still in the first wave of infections

  • Europe must prepare for the fall, when the flu will accompany the coronavirus

RBNZ: ‘Looser for longer’ seems the name of the game – UOB

FXStreet reports that Lee Sue Ann, Economist at UOB Group, assessed the latest RBNZ meeting and prospects of monetary policy in the next months.

“At its latest monetary policy, the Reserve Bank of New Zealand (RBNZ) decided to keep the Official Cash Rate (OCR) at 0.25% and to continue with the Large Scale Asset Purchase (LSAP) programme aimed at keeping interest rates low for the foreseeable future. The LSAP quantum remains set at NZD60bn.”

“In the accompanying press release, the RBNZ stated that “the Monetary Policy Committee is prepared to provide additional stimulus as necessary. As well as potentially expanding the LSAP programme, the Committee continues to prepare for the use of additional monetary policy tools as needed.”

“Markets are not pricing in much easing in the OCR for the rest of 2020, but it is still pricing roughly 75% odds of a cut by May 2021, largely driven by the RBNZ openly talking about the prospect of negative interest rates. We cannot rule out the possibility of negative interest rates in time, but that will come with considerable baggage and we do not expect the RBNZ to employ that option at this juncture.”

“For now, we think the RBNZ will continue to use volume announcements (eg. the programme is currently NZD60bn in size) as it fine-tunes its policy stance. We expect QE to be expanded to a cap of NZD90bn by August. Another option for the RBNZ is to adjust the QE programme to a type of “yield curve control” (or YCC), as used in Australia.”

EUR/USD to trade at 1.14 by year-end amid dollar downtrend – Westpac

FXStreet reports that economists at Westpac note that the US dollar trend has turned lower as hope over the recovery grows and forecast EUR/USD at 1.14 by year-end. Furthermore, the EU union to launch a stimulus package could lift the pair towards 1.20 by end-2021.

“Given the strength of the sentiment behind it, and in the absence of a clear second COVID-19 wave in key developed nations such as the US, it seems likely that this new US dollar downtrend will persist for the remainder of this year, and well into next.” 

“The euro is expected to rally to USD 1.18 by the end of 2021 after a period of stabilisation late this year near USD 1.14. Behind this move is not only broad–based optimism over the global economy but also the specific progress made within the Euro area to contain the virus and, this month, towards a co-ordinated fiscal package to renew growth.”

“The removal of remaining obstacles to the joint economic stimulus package could boost sentiment such that Euro rises to USD 1.20 or above before end-2021.”

ECB to provide euro loans to non euro zone central banks

Reuters reports that the European Central Bank will offer euro loans against collateral to central bank outside the euro area to backstop funding markets amid the coronavirus pandemic, it said on Friday.

Under the Eurosystem repo facility for central banks, the ECB will provide euro liquidity to a broad set of central banks outside the euro area against adequate, euro-denominated marketable collateral, the bank said in a statement.

The new facility, which complements bilateral swap and repo lines, will be available until the end of June 2021.

USD/CNH seen within the 7.0400/7.1000 range – UOB

FXStreet reports that USD/CNH’s price action is now forecasted to gyrate between 7.0400 and 7.1000 in the next weeks, suggested FX Strategists at UOB Group.

24-hour view: “We held the view yesterday that “break of 7.0500 could lead to further USD weakness towards 7.0420”. USD subsequently dropped to 7.0458 before staging a surprisingly strong rebound and closed at 7.0810 (+0.32%).The rapid swings have resulted in a mixed outlook. For today, USD could continue to trade in a choppy manner, likely between7.0550 and 7.0900.”

Next 1-3 weeks: “We highlighted the increased downside risk yesterday and indicated “if USD closes below 7.0500, it could weaken to 7.0350”. USD subsequently dropped to 7.0458 before rebounding strongly to take out the ‘strong resistance’ level at 7.0800 (high of 7.0831). Downward pressure has eased and USD does not appear to be ready to move lower just yet. From here, USD is expected to trade sideways, likely within a broad 7.0400/7.1000 range.”

Spain to propose Economy Minister Calvino as Eurogroup chief

Reuters reports that Spain will propose its economy minister Nadia Calvino as a candidate to head the Eurogroup, the government said in a statement on Thursday, becoming the first country to formally announce a candidate.

The Eurogroup’s chairman leads the grouping of 19 euro zone finance ministers, a key decision making body in the currency bloc.

Proposals for the new chair must be submitted by the end of the day ahead of a confirmation vote planned for July 9, a government source said.

Calvino, who is also a deputy prime minister in Spain’s left-wing coalition government, has been tipped as a front-runner to take on the role by officials in Brussels.

The post has been vacant since Portuguese Finance Minister Mario Centeno announced earlier in June that he would not seek a second 2 1/2 year term.

Madrid has long held ambitions of chairing the group but with designs on leadership of the World Trade Organisation for Foreign Minister Arancha Gonzalez Laya, the government may have to choose between which post it wants to lobby for most.

Prime Minister Pedro Sanchez said it would be an honour for Calvino to head the group and noted she would be the first woman to hold the role.

USD/JPY faces solid support in the 106.00 area – UOB

FXStreet reports that sellers in USD/JPY are expected to meet strong support in the 106.00 neighbourhood, according to FX Strategists at UOB Group.

24-hour view: “Yesterday, we held the view that ‘further volatile price action is not ruled out but USD is likely to stay within yesterday’s broad range of 106.06/107.21’. Our view was not wrong as USD traded in a relatively quiet manner during Asian hours before suddenly surging to a high of 107.07. While overbought, the rapid rise in USD has scope to move above the strong resistance at 107.20 but 107.40 is likely out of reach. Support is at 106.80 followed by 106.50.”

Next 1-3 weeks: “We have held the same view for about 2 weeks wherein USD is under mild downward pressure and only a daily closing below 106.70 would indicate that it could weaken to 106.00. After trading in a muted manner for several days, USD woke up with a jolt as it dropped to 106.73 early yesterday, snapped back up to 107.21 before plunging overnight to a low of 106.06. The daily closing at 106.51 (-0.34%) is on the soft side and the risk from here is for USD to weaken. A break of the solid support at 106.00 is not ruled out but this level could remain intact for a few more days. Looking ahead, a break of this level would shift the focus to 105.50. On the upside, the ‘strong resistance’ level has moved lower to 107.20 from yesterday’s level of 107.40. On a shorter-term note, 106.95 is already quite a strong level.”

Asian session review: the US dollar rose moderately against major currencies

TimeCountryEventPeriodPrevious valueForecastActual
04:30JapanAll Industry Activity Index, m/mApril-3.4% -6.4%
06:00GermanyGfk Consumer Confidence SurveyJuly-18.6-12-9.6

During the Asian session, the US dollar rose against major currencies on the back of growing demand for safe assets. This was due to the continued increase in the number of new coronavirus diseases in the United States. According to the latest estimates, the number of new daily cases of the virus in the United States has increased to 36,000. The value is almost near the record level of 36,426 cases recorded at the end of April. The percentage of positive results in testing is also growing. The governors of New York, New Jersey and Connecticut ordered tourists from nine other US States to be quarantined for 14 days upon arrival, as COVID-19 showed signs of a surge in the Southern and Western parts of the country.

While some investors expect that the economic impact of the second wave of infection infections may be less than that of the first, some market participants think that politicians may not respond decisively so as not to risk the state of the economy.

Additional concern in the markets was caused by the tension in trade relations between Washington and Brussels. News has emerged that the US is considering changing tariff rates on various European products. All this undermines hopes for a rapid recovery in the global economy and encourages investors to reduce their appetite for risky assets.

The canadian dollar continued to decline against the background of the downgrade of Canada's sovereign rating by Fitch to the level of "AA “from” AAA", citing the deterioration of the country's public finances in 2020 due to the COVID-19 pandemic.

GBP/USD: Brexit issues to lower 1.27 end-2020 forecast – Westpac

FXStreet reports that economists at Westpac note that the US dollar trend has turned lower as hope over the recovery grows and forecast the GBP/USD pair at 1.27 by year-end. Nonetheless, Brexit issues could make the cable to trade around the 1.25 level.

“It seems a decisive turn in the US dollar trend has been seen in the past month. The move is the result of optimism amongst investors over the global recovery from COVID-19, and consequently a greater willingness to take on risk. The actions of authorities to contain the virus and the provision of extraordinary stimulus by the FOMC and other central banks across the globe has been pivotal. Given the strength of the sentiment behind it, and in the absence of a clear second COVID-19 wave in key developed nations such as the US, it seems likely that this new US dollar downtrend will persist for the remainder of this year, and well into next.”

“After a period of stability to year-end, we look for sterling to lift from USD 1.27 at December 2020 to only USD 1.30 December 2021.”

“There is a very real risk that Brexit delays could result in sterling spending more time in the mid-1.20's against the US dollar compared to our USD 1.27 and USD 1.30 end-2020/2021 baseline forecasts.”

Countries are ‘highly unlikely’ to impose full lockdowns again if there’s a second wave, analysts say

CNBC reports that сountries are very unlikely to impose another full lockdown even though there’s a resurgence of new coronavirus cases in some parts of the world, analysts told.

The situation is unlikely to be a repeat of March, Suresh Tantia, senior investment strategist at Credit Suisse’s APAC CIO office, told CNBC on Thursday. That was when the pace of virus cases started to intensify in the U.S. and Europe, after first surfacing in China last December.

“This second wave of virus is a concern for investors ... but I think the key difference is that unlike last time in March, this time it’s highly unlikely that we would see a shutdown of the global economy,” he said.

“If you look at the March selloff, the reason why markets sold off was not because of the virus concerns, it was mostly because the global economy shut down,” Tantia added. “It’s a concern for the markets, but as long as we don’t see a repeat of March ... I think markets will look through this and focus more on recovery over the next few quarters.”

Hartmut Issel, head of APAC equities at UBS Global Wealth Management, also told CNBC that countries are “very unlikely” to go down the path of a total lockdown again.

“Locking down an entire country ... cost(s) you up to 3% of GDP per month, so even the richest nations on the planet cannot afford another two, three months complete lockdown,” he said.

CAD: Loonie can’t forever fly with the flock; where to target? - CIBC

eFXdata reports that CIBC Research discusses USD/CAD outlook and targets the pair at 1.39 in Q3.

"Much of the surprising rebound in the Canadian dollar since late March was tied to the loonie flying with the flock of other majors’ gains on the greenback, with a tailwind from a turn in crude prices. We’ve reduced our targets for C$ weakness ahead due to that recovery in oil. However, we do not believe the Canadian dollar will be able to sustain that run, and will see 1.40 again at some point during this recovery. 

Unlike the Eurozone or Japan, Canada entered this recession with a weak current account and trade balance, and the prior expansion’s lackluster growth in real exports suggests its overvalued on trade fundamentals. Second, the C$ rallied when the market oddly priced in an earlier return to central bank tightening than elsewhere in the G-7.  If anything, there’s a risk that smaller countries like Canada won’t be able to muscle their way to the front of the vaccine lineup," CIBC notes. 

"In addition, the country’s overweight in energy points to a weaker 2020 starting point versus the US. Look for the Bank of Canada to pound home the message the output gap will remain wide over its full forecast horizon, implying a long wait for any move off near-zero rates, and helping to take some luster off the currency," CIBC adds. 

Consumer climate in Germany continues to recover - GfK

According to the report from GfK Group, consumers in Germany are recovering from the shock of the coronavirus thanks to the rapid reopening of the German economy and society. Both economic and income expectations, as well as propensity to buy, are rising. As a result, GfK has forecast a figure of -9.6 points for July 2020, 9 points higher than its level in June of this year (revised to -18.6 points). 

Consumers are increasingly reawakening from the state of shock that led to an unprecedented fall in sentiment as recently as April. This means that the consumer climate is rising for the second time in a row. As a consequence, the indicator has gained more than 13 points since its low in April of this year. It should be noted, however, that a value of -9.6 points is the third lowest value ever recorded for the GfK Consumer Climate in Germany.

"The faint light at the end of the tunnel, which was already apparent last month, is apparently getting somewhat brighter," explains Rolf Bürkl, GfK consumer expert. "The extensive support provided by the economic stimulus packages, such as the announcement of a temporary reduction in value-added tax (VAT), is certainly a contributing factor. Provided that retailers and manufacturers also pass these reductions on to consumers, it can be assumed that one or two planned purchases will instead be made in the second half of 2020, thereby supporting consumption this year." 

As in the previous month, a significant drop in the propensity to save is also supporting the consumer climate in June, which is down 15.4 points. For the second time in a row, consumer economic expectations increased in June. The increase is surprisingly obvious with a rise of 18.9 points. At 8.5 points, the indicator has managed to crawl back up into positive territory, i.e. above its long-term average of zero points.  Also for the second time in a row, income expectations rose in June. The indicator rose by 12.3 points to 6.6 points. Nevertheless, it is still close to 39 points below its value this time last year.

Germany: Gfk Consumer Confidence Survey, July -9.6 (forecast -12)
Options levels on thursday, June 25, 2020 EURUSD GBPUSD


Resistance levels (open interest**, contracts)

$1.1343 (1976)

$1.1319 (1274)

$1.1302 (1175)

Price at time of writing this review: $1.1250

Support levels (open interest**, contracts):

$1.1237 (2094)

$1.1211 (627)

$1.1178 (793)


- Overall open interest on the CALL options and PUT options with the expiration date July, 2 is 52490 contracts (according to data from June, 24) with the maximum number of contracts with strike price $1,1700 (2278);


Resistance levels (open interest**, contracts)

$1.2540 (499)

$1.2487 (499)

$1.2456 (641)

Price at time of writing this review: $1.2420

Support levels (open interest**, contracts):

$1.2368 (1464)

$1.2341 (653)

$1.2309 (836)


- Overall open interest on the CALL options with the expiration date July, 2 is 15835 contracts, with the maximum number of contracts with strike price $1,2800 (1690);

- Overall open interest on the PUT options with the expiration date July, 2 is 18583 contracts, with the maximum number of contracts with strike price $1,2550 (1484);

- The ratio of PUT/CALL was 1.17 versus 1.20 from the previous trading day according to data from June, 24


* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.

Japan: All Industry Activity Index, m/m, April -6.4%
Commodities. Daily history for Wednesday, June 24, 2020
Raw materials Closed Change, %
Brent 40.26 -5.11
Silver 17.46 -2.46
Gold 1761.054 -0.33
Palladium 1879.33 -2.23
Stocks. Daily history for Wednesday, June 24, 2020
Index Change, points Closed Change, %
NIKKEI 225 -14.73 22534.32 -0.07
Hang Seng -125.76 24781.58 -0.5
KOSPI 30.27 2161.51 1.42
ASX 200 11.3 5965.7 0.19
FTSE 100 -196.43 6123.69 -3.11
DAX -429.82 12093.94 -3.43
CAC 40 -146.32 4871.36 -2.92
Dow Jones -710.16 25445.94 -2.72
S&P 500 -80.96 3050.33 -2.59
NASDAQ Composite -222.2 9909.17 -2.19
Schedule for today, Thursday, June 25, 2020
Time Country Event Period Previous value Forecast
04:30 Japan All Industry Activity Index, m/m April -3.8%  
06:00 Germany Gfk Consumer Confidence Survey July -18.9 -12
10:00 United Kingdom CBI retail sales volume balance June -50 -34
11:30 Eurozone ECB Monetary Policy Meeting Accounts    
12:30 U.S. Goods Trade Balance, $ bln. May -69.68  
12:30 U.S. Continuing Jobless Claims June 20544 19968
12:30 U.S. Durable Goods Orders May -17.2% 10.9%
12:30 U.S. Durable goods orders ex defense May -16.2%  
12:30 U.S. Durable Goods Orders ex Transportation May -7.4% 2.5%
12:30 U.S. Initial Jobless Claims June 1508 1300
12:30 U.S. PCE price index ex food, energy, q/q Quarter I 1.3% 1.6%
12:30 U.S. PCE price index, q/q Quarter I 1.4% 1.2%
12:30 U.S. GDP, q/q Quarter I 2.1% -5%
13:30 Eurozone ECB's Yves Mersch Speaks    
13:30 U.S. FOMC Member Kaplan Speak    
15:00 U.S. FOMC Member Bostic Speaks    
16:00 U.S. FOMC Member Mester Speaks    
23:30 Japan Tokyo CPI ex Fresh Food, y/y June 0.2% 0.2%
23:30 Japan Tokyo Consumer Price Index, y/y June 0.4% 0.6%
Currencies. Daily history for Wednesday, June 24, 2020
Pare Closed Change, %
AUDUSD 0.68678 -0.84
EURJPY 120.446 0.03
EURUSD 1.1253 -0.48
GBPJPY 132.938 -0.19
GBPUSD 1.24228 -0.69
NZDUSD 0.64082 -1.25
USDCAD 1.36361 0.66
USDCHF 0.94724 0.27
USDJPY 107.013 0.51

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