Market Update: 20 July 2020
Oh dear friends in the EU, it’s these stumbles that remind the UK they did the right thing… As EU goes into its 3rd day of negotiating a recovery fund deal, the markets are left waiting for direction. As such, the inability to conclude has given back the small gains from the Friday night session.
The week ahead looks a bit directionless as well for data and liquidity given Japan is on holiday today. We do have the Australian budget – which will give some further insights into stimulus and given the news reports, could show an extension of jobkeeper and jobseeker, but at a higher level of scrutiny.
GBP has been under the spotlight as not only does it continue to test its relationship with China – by intimating it will suspend its extradition treaty with Hong Kong, but as well there’s talk BOE will be reigniting the conversation about negative interest rates – putting more pressure on the currency. This though, alongside other currencies is primed for a breakout in its flattened trend the past few weeks and may see USD Index prosper.
AUD is singing the same song with a lack of momentum for a new direction. It’s fair to say in these times when nothing happens, stocks and AUD drift higher… but COVID is still our Achilles heel with Victoria still in the 100’s of daily cases and NSW in double digits and what would be a line-ball decision to move back to isolation mode.
Have a safe week ahead.
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