Danske Research Team
Danske Bank A/S
Market movers today
Today we have lot of interesting things on the agenda besides monitoring the global COVID-19 development, which, sadly, continues to move in the wrong direction in the US and emerging markets/developing countries.
Fed Chair Jerome Powell and Treasury Secretary Mnuchin both speak during a virtual hearing before the Senate Banking Committee. While we do not expect Powell to send any new signals (in that regard we think the FOMC minutes tomorrow are more interesting due to the yield curve control discussions), we will listen carefully to Mnuchin if he says something about fiscal policy. The temporarily higher unemployment benefits expire by the end of July and negotiations on whether to extend this (possibly at a lower level) are expected to begin after the 4 July holiday.
In terms of data points today, euro area flash HICP inflation for June is due out at 11:00 CEST. Monthly French private consumption for June is also interesting with respect to monitoring the economic rebound in the euro area. In the US, consumer confidence from Conference Board is expected to increase slightly as signalled by the weekly consumer index from Bloomberg. The Brexit negotiations, which restarted yesterday, continue today.
In Scandinavia, NIER extra business survey for Sweden is due at 09:00 CEST. In Denmark, gross unemployment data for May is due at 08:00 CEST.
Selected market news
Global equity indices traded with positive risk sentiment yesterday, despite continuing COVID-19 concerns. Gilead's COVID-19 drug treatment Remdesivir was rumoured yesterday to cost USD2340 for a five-day treatment. That is viewed as a (positive) sign that the product is in an advanced stage for treatment. We do not think it would be a big deal for developed countries to fund the treatment, as it is significantly cheaper than treating an ICU patient each day. Earlier, it has been said that Gilead would sell the Remdesivir drug at cost price.
According to two sources, the German Bundestag agreed on a draft motion to approve the Bundesbank's participation in the PSPP bond purchase programme, thereby ending the legal dispute in which the German constitutional court requested a new decision validating the proportionality of the bond purchase programme.
Chinese manufacturing PMI released overnight came in at 50.9, slightly higher than consensus, as a sign of still weak growth in the Chinese economy. The composite PMI rose to 54.2. Chinese lawmakers are said to have approved the legislation that ‘punishes acts of secession, subversion, terrorism and collusion with foreign forces'.
Sunday's vote in Poland ended with 44% for current President Duda, followed by Warsaw Mayor Rafal Trzaskowski at 30%. They will face each other in a run-off on 12 July. The PLN was largely unaffected by the vote. However, the future of Poland and its relations with the EU can be shaped by this election.
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Editors’ Picks
AUD/USD remained bid above 0.6500
AUD/USD extended further its bullish performance, advancing for the fourth session in a row on Thursday, although a sustainable breakout of the key 200-day SMA at 0.6526 still remain elusive.
EUR/USD faces a minor resistance near at 1.0750
EUR/USD quickly left behind Wednesday’s small downtick and resumed its uptrend north of 1.0700 the figure, always on the back of the persistent sell-off in the US Dollar ahead of key PCE data on Friday.
Gold holds around $2,330 after dismal US data
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
Bitcoin price continues to get rejected from $65K resistance as SEC delays decision on spot BTC ETF options
Bitcoin (BTC) price has markets in disarray, provoking a broader market crash as it slumped to the $62,000 range on Thursday. Meanwhile, reverberations from spot BTC exchange-traded funds (ETFs) continue to influence the market.
US economy: slower growth with stronger inflation
The dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.