Gobal indices jumped ahead of the US open on positive findings about an experimental coronavirus vaccine from Pfizer and BioNtech, which produced a high level of antibodies. Tuesday's news of stronger US consumer confidence data and stable US virus cases were sufficient to boost risk trades to a strong finish for the quarter. ADP jobs data also came in stronger than expected. The ISM manufacturing survey is due up next. The chart below shows positive US economic data surprises are away ahead of the rest, raising the question about sustainability. Each of the last two Premium trades is up +250 pts and open.
US consumer confidence continued to rebound in the June report at 98.1 compared to 91.4 expected. That continues a series of strong beats in US economic data. Particularly encouraging was a jump in the 'expectations' component to 106.0 from 96.9 a month earlier.
The data helped to launch risk trades higher, including a 1.5% rise in the S&P 500 and large gains in the commodity currencies. More broadly, the US dollar was under significant pressure, likely due to quarter-end flows.
In terms of COVID-19, cases in US hotspots remained at high levels but there was some leveling off in Florida. We warn that's likely due to weekly trends and is likely to reverse in the day ahead. In Texas, Arizona and several smaller states, cases hit record highs.
On the quarter, the Australian dollar was the best performer by a significant margin with NZD in second place. Clustered at the bottom were the yen, pound and US dollar.
Year-to-date performance, however, offers a clearer picture of impact of the virus with the Swiss franc on top and the pound lagging. Within all that, there have been dozens of major swings.
In equity markets, the moves were massive. For US stocks, it was the best quarter since 1998 and the the first time a +20% quarter marked a -20% quarter since 1932. Within US stocks, the divergence was stark with the DJIA up 17.8% and the Nasdaq up 30.6%. Elsewhere, the FTSE 100 rose a relatively modest 8.8% while the DAX climbed 23.9%.
The day ahead features more economic data and we remind readers that non-farm payrolls will be on Thursday rather than the usual Friday slot accounting for the US holiday. The market is likely to focus on the ISM manufacturing report for June. A series of regional numbers have beaten the consensus, some by a larger margin so risks to the 49.9 consensus are undoubtedly on the upside.
Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.
Recommended Content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.