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The Japanese yen has been rising rapidly for the past week, and it looks like it won’t stop anytime soon. However, it looks like the risk-sensitive Canadian dollar is expected to step up against the safe haven with a bumpy road upwards, near-term. Canada’s report on its GDP is expected to surge from -11.6% to 3.5% in May, a sign that investors are optimistic over its economic recovery even while the coronavirus takes over the rest of the world. Moreover, economic analysts expect the same figure to rebound by 3.9% for the month of July, an adjusted measure from the 3.0% expected prior. Meanwhile, the Bank of Japan warned about the recent rally over key currencies like the loonie. The Japanese government also confirmed that the country has been in recession since it had peaked in October 2018, suggesting it was struggling even before the coronavirus. The news is expected to push the CADJPY up near-term.
Australia’s second COVID-19 wave continues to rise, and Victoria is worried it would escalate. The daily inflection rate in the state reached a record 723 cases and remained elevated 627 cases today. Moreover, there’s a lingering threat that Australia’s unemployment rate will hit 9.25% before Christmas and the economy would contract by 2.5% in the full fiscal year of 2020. Melbourne is also in its sixth week in lockdown, and all big banks are incorporating it into their forecasts. The National Australia Bank chief economist Alan Oster is also considering a readjustment for the number even lower. The series of pessimism is expected to push the Australian dollar down against the safer Japanese yen, even after it showed higher-than-expected figures for Weighted mean CPI and overall CPI for the region when comparing the first quarter of this year and the second, announced earlier this week.
After the largest economy in the eurozone fell to its lowest GDP record during the second quarter, by 11.7% on a yearly basis and by -10.1% on a quarterly basis, the Euro is expected to fall even further against the Canadian dollar. This is happening even though the French GDP reported a better-than-expected increase for Q2 quarter-over-quarter, which came in at -13.8% against expecations of -15.3%. This is largely because the economy had fell at a much lower rate during the first quarter at -5.9%. Spain then reported a steeper decrease at -19.5% in GDP against market expectations of -16.6%. Meanwhile, Canada’s economy is expected to rise to 3.5% on a monthly basis in May against the previous month, which came in at -11.6% in April. July’s GDP figure is also expected to rebound by 3.9% more in July. Although, investors should look out for Canada’s Raw Materials Price Index, expected to fall in June in comparison to May.
Economists are increasingly getting worried about GDP readings from both the UK and the Eurozone. When compared to each other, however, it looks like the UK is seeing a better economy than Europe. The United Kingdom’s Nationwide HPI increased both on a monthly and a yearly basis. Namely, HPI upped both expectations and forecasts in July against June. The market expected the figure to rise from -1.6% to -0.1%, but saw 1.7%. the more surprising figure was from its yearly figure, which was -0.1% last year and upped to 1.5% this month. Several GDP figures in the Eurozone fell by a large margin during the second quarter as per their announcements earlier this week, and even though the French GDP saw a higher-than-expected figure during this quarter, it still saw a large fall against Q1, which saw a -5.9% decrease. For Q2, the French GDP came in at -13.8% against expectations of -15.3%.