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COVID-19 Jitters and Geopolitical Risk to Test Risk Sentiment

Bob Mason

Earlier in the Day:

It was a quiet start to the week on the economic calendar on Monday. The Japanese Yen was in action early in the day.

Away from the stats, last week’s rise in new coronavirus cases and further spikes over the weekend weighed in riskier assets

From the weekend, May’s industrial profit and fixed asset investment figures failed to shift the negative sentiment early on.

Industrial profits were up by 6.00% in May, year-on-year, rebounding from a 4.30% slide in April. Year-to-date, however, industrial profits were down 19.3%, improving marginally from a 27.4% drop in April.

Looking at the latest coronavirus numbers

On Sunday, the number of new coronavirus cases rose by 136,417 to 10,229,030. On Saturday, the number of new cases had risen by 208,420. The daily increase was lower than Saturday’s rise while up from 131,020 new cases from the previous Sunday.

Germany, Italy, and Spain reported 650 new cases on Sunday, which was down from 1,029 new cases on Saturday. On the previous Sunday, just 917 new cases had been reported.

From the U.S, the total number of cases rose by 35,905 to 2,632,442 on Sunday. On Saturday, the total number of cases had risen by 48,661. On Sunday, 21st June, a total of 26,079 new cases had been reported.

For the Japanese Yen

According to the Ministry of Economy, Trade, and Industry, retail sales tumbled by 12.3% in May, year-on-year, following a 13.9% slide in April. Economists had forecast an 11.6% decline.

The Japanese Yen moved from ¥107.182 to ¥107.186 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.07% to ¥107.29 against the U.S Dollar.

Elsewhere

The Aussie Dollar was up by 0.06% to $0.6869, with the Kiwi Dollar up by 0.06% to $0.6427.

The Day Ahead:

For the EUR

It’s a quiet day ahead on the economic calendar. Germany and Spain’s prelim inflation figures for June are due out later today.

We don’t expect the numbers to have any material influence on the EUR, however. COVID-19 and geopolitics will likely be the key driver.

With the EU also reporting clusters over the weekend, further negative news updates would be EUR negative. There is also the threat of U.S tariffs on the EU to consider…

At the time of writing, the EUR was up by 0.13% to $1.1234.

For the Pound

It’s also a particularly quiet day ahead on the economic calendar. There are no material stats due out to provide the Pound with direction.

Brexit and COVID-19 will be the key drivers on the day. Brexit news updates from the weekend were certainly not positive for the Pound. British PM Boris Johnson and the team have threatened to walk away from the table.

Talks are set to resume today…

At the time of writing, the Pound was up by 0.15% to $1.2355.

Across the Pond

It’s a relatively quiet start to a busy week on the U.S economic calendar. Key stats include May’s pending home sales figures that will likely have a muted impact on the Dollar.

The markets will likely play catch up from the weekend’s latest COVID-19 updates that point to a testy day ahead.

Later in the day, we can expect chatter from Capitol Hill, U.S states, and COVID-19 news updates to also influence.

At the time of writing, the Dollar Spot Index was down by 0.03% to 97.405.

For the Loonie

It’s a relatively busy day ahead on the calendar. Key stats include May’s RMPI and building consent figures.

We don’t expect any lasting impact on the Loonie, however, with market sentiment towards COVID-19 likely to be the key driver.

The threat of a 2nd wave pandemic would sink sentiment towards the demand for crude, which would be a negative for the Loonie.

At the time of writing, the Loonie was up by 0.19% to C$1.3662 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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