Finance

Weekly review of exchange market of CICC: non farm far exceeded expectations, US dollar rose the largest in nearly two months

This week, the geopolitical situation intensified, the market uncertainty increased, the global epidemic situation remained grim, which impacted on the prospects of economic recovery, as well as the extremely loose monetary and fiscal policies around the world. With so much news, spot gold bravely broke the $2000 mark, and almost every day it was rewriting the record high. Despite the unexpected fierce selling on Friday, it was still for nine consecutive weeks The U.S. dollar rebounded on Friday after a series of declines, as the latest U.S. non farm employment report was better than market expectations, but the US dollar remained weak throughout the week and fell against G10 currencies and emerging market currencies.

next week, the focus of the global market will still be on when the new round of U.S. rescue plan can be passed, the scale of its adoption, and whether the tension in geographical relations will cause sudden changes in market sentiment. Earlier, the novel coronavirus pneumonia epidemic in the world has also attracted attention, because in the middle of 7 months, the high frequency data show that the economic recovery has slowed down. If the epidemic situation is aggravated, it will also affect investor sentiment. In addition, in terms of economic data, we focus on inflation indicators such as PPI and CPI in the United States, as well as “terrorist data” in retail sales and industrial output.

according to a report from the U.S. labor office, employment in the leisure and hotel industry, government, retail trade, professional and business services, other services and health care sectors increased significantly in July. Among them, although the U.S. epidemic rebounded even more in July, the leisure and hotel industry still led the rise in new jobs, with a total of 592000, including 502000 in the food and beverage industry.

the number of government posts increased by 301 000; that of retail industry increased by 258000; that of other professional and commercial services increased by 170000. At the same time, the number of new non-agricultural employment increased from 2.7 million to 2.725 million in May, and the number of new non-agricultural employment decreased from 4.8 million to 4.791 million in June. [888% of the data collected in the previous 12-month survey, however, is still higher than the average employment rate of the non industrial sectors [888% in the previous 12-month survey], which is still much longer than the average of the data collected in the previous survey. The “misclassification” issue has been evaluated and the findings will be published, but the exact scope of the “misclassification” is still unknown.

at 2:00 p.m. Beijing time, the Bank of England announced the interest rate resolution, announcing that the key interest rate would remain unchanged at 0.1%, which was in line with market expectations. The voting ratio of this time was 0-9-0, and the committee unanimously agreed to the interest rate decision. On the scale of asset purchase, the monetary policy committee also agreed to keep the purchase scale of 745 billion pounds unchanged. When the resolution was announced, the short-term fluctuation of the pound against the US dollar was about 34 points.

in this month’s interest rate resolution, the voting ratio of central bank officials to increase interest rate, keep unchanged and cut interest rate was 0-9-0, and the committee unanimously agreed to this interest rate decision.

the Bank of England pointed out that the outlook for the UK and the global economy remains uncertain, and the subsequent recovery will largely depend on the evolution of the new crown. However, the Commission’s prediction is that the direct economic impact of the new coronavirus will gradually disappear over the forecast period.

the Bank of England also mentioned that the risk of GDP growth outlook still tends to be downward, and the survey shows that business investment may decline significantly in the second quarter, and investment willingness is still very weak. The Bank of England’s GDP growth forecast for 2020 is – 9.5%, compared with – 14% in May this year; as for 2021, GDP growth is expected to be 9% and may is expected to be 15%. And the Bank of England also expects GDP to fall by 21% in the second quarter, while the unemployment rate will rise to about 7.5%. In addition, the Bank of England pointed out that after the end of the current support plan, there is still considerable uncertainty in the employment prospects, and the British economy will not be able to recover to the level of the fourth quarter of last year until the end of 2021, which was expected to be in mid-2021 in May.

on Tuesday, the Australian Federal Reserve announced that it would keep the interest rate of 0.25% unchanged and maintain the yield target of 3-year treasury bonds at 0.25%, which is in line with market expectations. After the announcement of the interest rate resolution, the short-term fluctuation of AUD / USD against USD was not large, temporarily at 0.7120.

the RBA said it would keep its easing measures as long as possible, and would resume bond buying on Wednesday. The Committee promised to take all measures to support employment, income and enterprises, and will keep the target unchanged until progress is made towards achieving full employment and inflation targets.

the RBA said the global outlook is still uncertain and the global recovery is expected to be gradual. The RBA said fiscal and monetary support is likely to continue for some time and most of the Australian economy is recovering. The RBA expects the average inflation rate in the next few years to be between 1% and 1.5%, and the inflation rate is expected to remain below 2%. The outbreak of the novel coronavirus pneumonia in Vitoria has had a major impact on the state economy, and inflation is expected to return to the positive area this quarter.

the Australian Federal Reserve said the Australian economy is going through a very difficult period, experiencing the largest contraction since the 1930s. The government’s recent announcement that it will extend various income support measures is a welcome development. The basic assumption is that output will grow by 5% next year. In the next few years, the unemployment rate is expected to gradually drop to about 7%. The basic scenario is that the unemployment rate will increase to 10% later in 2020, and the basic scenario is that the output will drop by 6% in 2020. The support for Australian economy was introduced in mid March The package works as expected, and the economic recovery could be stronger if progress is made in the near future to curb the new coronavirus.

the new epidemic situation has a great impact on the European economy. The latest economic data show that in recent years, some countries have been “unsealed with epidemic diseases”. With the gradual promotion of resumption of production and work, the manufacturing, retail and tourism industries in many European countries are picking up, and the employment situation is improving.

according to the latest data released by market research institution Exin Huamai on March 3, the purchasing managers’ index of the manufacturing industry in the euro area rebounded from 47.4 in June to 51.8 in July, better than expected, and it was the first time to stand on the 50 strong and weak line since the beginning of 2019. Boosted by the good news, the main European stock indexes generally rose on the same day.

Chris Williamson, chief economist of Aisin Huamai, said that the manufacturing industry in the euro zone started well in the third quarter, and the manufacturing output is expected to further increase in August. Williamson also pointed out that the labor market may be the key to the recovery of the euro zone economy. German manufacturing PMI rose to 50.0 in July from 45.2 last month, the highest level in the past 19 months, according to data released by the company. Experts believe that this is mainly due to the recovery of output and new orders, indicating that German manufacturing is on the right track of gradual recovery.

Spain’s manufacturing sector also performed relatively strongly in July, with the PMI of the manufacturing sector rising to 53.5 from 49.0 last month. Meanwhile, statistics from the Spanish National Bureau of statistics showed that the number of international tourists received in Spain in June had begun to recover compared with the period of the epidemic.

according to the data released by the office for National Statistics recently, the retail sales of goods in the UK have returned to the level close to the pre epidemic level in June. UK retail sales rose 13.9% month on month in June, the second consecutive month of strong growth, according to data. Andrew sentance, an economist who was a member of the monetary policy committee of the Bank of England, said that retail sales rebounded significantly in June due to factors such as the relaxation of the “home order” policy, which is the most positive indicator of economic recovery we have seen so far.

recently, affected by factors such as the rebound of the epidemic situation and the persistence of ultra loose monetary policy, the currency exchange rates of emerging market countries fluctuated violently and showed a downward trend, which aggravated the economic risks of these countries.

, with novel coronavirus pneumonia cases increasing, worries about the pace of economic recovery have triggered a risk aversion. South African rand fell to the lowest level in two months this week to 17.5.

in South Africa, the total number of confirmed cases of new coronavirus exceeded 500000 at the end of last week. South Africa’s economy continues to show signs of slowing recovery as car sales and factory activity remain sluggish. The Central Bank of South Africa has cut its benchmark interest rate four times this year, and the government has launched a social assistance and economic support program totalling r 500 billion.

Turkey is also under pressure from the collapse of its currency value. Due to high debt and insufficient foreign reserves, the value of its currency has fallen to an all-time low. “Wall Street Journal” article said that concerns about Turkey’s economic prospects have recently triggered new fluctuations in the lira. The central bank has used a significant portion of its foreign exchange reserves to boost the lira, leaving the government little room to maneuver.

as Turkey has not enough foreign exchange reserves to sell, in order to maintain the quasi pegged exchange rate of the Turkish Lira, the interest rate of overnight swap transactions in the Turkish Lira on the London market soared from 6.8% on July 29 to 280% on August 4. According to refinitiv data, there was a difference of 1024 basis points before and after the surge, a record high.

Turkish banks have previously cut financing in the London swap market in order to crack down on short traders in the lira, thus curbing the lira’s decline. According to foreign media reports, Turkey’s state-owned banks sold us dollars sharply last week, draining the lira’s liquidity at the time of settlement.

Reuters reported recently that the yield of US Treasury bonds fell to a new low for many years in July. Under such circumstances, foreign capital usually flows into emerging markets to seek income from high-yield assets of these countries.

with the intensification of Global trade friction and the coming of the weekend, investors’ willingness to hold the US dollar is warming up. At the same time, the overall non-agricultural data of the United States is improving. In addition, this week, while the epidemic situation in the United States has slightly eased, the number of infected countries in Europe has risen, which partially reversed the market momentum that previously suppressed the US dollar and boosted the euro. However, ANZ expects the euro to rise to 1.21 against the US dollar by the end of the year. In essence, fiscal policy is tightening. As time goes on, its focus will shift from emergency planning to growth areas (digital, environment, infrastructure). In view of the uncertainty of the upcoming US election and the expectation that the US Federal Reserve will further relax monetary policy in the autumn, the macro background supports the US dollar in It fell before the bottom.

the British pound hit a five month high against the US dollar to 1.3186. The Bank of England’s resolution was well worded, emphasizing the effectiveness of the policy measures taken since the beginning of the year and avoiding the prospect of further easing policies, including negative interest rates. However, Bailey, governor of the Bank of England, has repeatedly said that there is a negative interest rate in the toolbox, but it has no plan to use it. This has kept the pound moving higher. Fxstreet analysts expect initial support at 1.3085. The resistance is at 1.3170. The kinetic energy of the 4-hour map is still positive, but the kinetic energy is weakened. The support was at a day low of 1.3085, followed by 1.3055, and 50sma touched the price. The next level focused on 1.2985 and 1.29. Resistance was at a July high of 1.3170, followed by new highs of 1.3183 and 1.32. The upper resistance is 1.3270 and 1.3320.

under the background that the global foreign exchange market is still inevitably dominated by risk aversion in the near future, the USD / JPY will fall into the range consolidation mode again this week. It is expected to fluctuate in the range of 105.00-106.60 in the future. Earlier, the U.S. dollar recorded a sharp decline against the yen last week, falling below the psychological level of 105, due to the rapid epidemic situation in the United States

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