The U.S. dollar is modestly on the front foot to start the week as risk aversion is back on fears of a second wave of coronavirus dominate headlines.
More than 20 U.S. states are seeing new covid-19 cases surge as most of the country continues to ease lockdown restrictions. Second wave fears are not restricted to our shores with new outbreaks in Beijing and Tokyo worrying markets.
This morning’s economic data was positive, but it will likely not be enough to put a dent in the expected market sell-off. Empire State manufacturing surprised to the upside registering a decline of only -0.2, beating expectations of -35.0. Nevertheless, DOW futures are down 650 points and both S&P and Nasdaq point to losses over 1.0% at the open.
Later this morning, Dallas Fed President Robert Kaplan will speak at an online event followed by San Francisco Fed President Mary Daly will speak about monetary policy at a National Press Club event.
What to Watch Today…
- No major events scheduled for today
Complete Economic Calendar can be found here.
The Australian dollar was one of the biggest losers overnight, mostly on coronavirus news from China. China is Australia’s largest trading partner. The world’s second largest economy reported its largest daily increase in cases since mid-April. The government locked down more than 20 housing districts near Beijing’s largest fruit and vegetable supply center.
Chinese data also dragged on regional currencies. Industrial output rose less than expected and retail sales fell by more than forecast by economists.
The British pound’s impressive run to start the month seems to be in the rearview. Sterling fell in early trading and touched a two-week low but has managed to claw back some of those losses. Brexit is once again front of mind for traders. British Prime Minister Boris Johnson is currently holding talks with EU officials. Both sides are looking to jumpstart negotiations that have gone stale in recent weeks. While the outcome is far from certain but when Brexit is in the headlines, sterling gains will be limited.