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The weakness in Sweden’s reports for this week is helping the pair to recover from its recent low. On Wednesday, August 05, the Swedish government unveiled its guide for the looming second quarter GDP report QoQ on August 28. The initial expectations for Q2 was a massive economic decline of -8.6%. If the actual figure for the final GDP report came close to the estimates, this will be the country’s biggest economic decline in history. Aside from this, last Wednesday’s report for Sweden’s Industrial New Orders YoY represents its fourth consecutive monthly decline. Figures were recorded at -11.9%. Other European countries also published their reports for this week. However, unlike Sweden, these countries reported better figures for this month’s results. Germany, France, and Italy’s Services and Composite PMI reports all posted above 50 points figures. This suggests that the EU’s largest economies are on track towards economic recovery.
The US dollar will continue to disappoint investors in the coming weeks. The United States and Canada both posted figures for their employment reports this week. America’s unemployment rate dropped to 10.2% in July compared to 11.1% in the month prior. Canada also beat estimates for its unemployment after posting 10.9% rate. Expectations by analysts were at 11.0% while its unemployment rate in June was at 12.3%. However, the supporting reports for the unemployment rate shows the opposite. Canada added 418.5K jobs last month, which is higher from 400.0K estimates. On the other hand, job creations in the US based on today’s report for NFP showed 1,763K jobs addition, which is lower compared to 4,800K figure in June. These contradicting reports are expected to take a toll on the USD. Investors should also take the initial jobless claims report into consideration after it hit its lowest figure at 1,186K since the pandemic began in March.
The success of Denmark against the coronavirus pandemic is helping the Danish shares market and krone to thrive in the market. Denmark has more than 14,000 cases with only 600 deaths, figures that are way better compared to its neighbors. With the reopening of classes in the country, investors were convinced that Denmark will be a smart investment decision. Year-to-date, the country’s stock index went up by 25% compared to the US S&P500’s 23% performance this year. In its Industrial Production MoM report, Denmark also posted positive a figure of 4.0% following three (3) consecutive negative growth in the previous months. The US also reported impressive figures for Markit and Services Purchasing Managers Index (PMI), both of whom reached the 50 points benchmark for economic expansion. However, its weak non-farm payrolls (NFP) report today is expected to further send the greenback lower in coming sessions.
The recent strength of the single currency will soon end. This was following the reopening of classes in Denmark after it successfully contained the virus. Investors perceive this as a future trend for Europe as most countries began lifting several restrictions. However, investors will choose Danish assets over the EU’s economic powerhouses, Germany and France. These two (2) economic and political leaders posted positive figures of Composite and Services PMI report at 55.3 and 55.6, respectively, for Germany and 57.3 and 57.3, respectively, for France. Eurowide figures for these reports were also positive with 54.7 and 54.9 points, respectively. Despite these positive figures, however, the prospect of robust recovery is not at the list of analysts’ expectations. Germany is expected to contract by 6.5% for the fiscal year while analysts are projecting France to have the biggest economic decline in the EU at 14.1%.