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Australia and Canada were moving in the same direction but with different paths. The coronavirus pandemic has caused a global lockdown, triggering economies to report negative growth figures. Australia’s 29 years of bull run ended this June after the country reported its first economic contraction in nearly three decades. Canada’s economy, on the other hand, is expected to slow down in the coming months. For decades, the country has relied on immigration to bolster infrastructure and spending. Now that the world is in a lockdown, economic activity in the country is expected to be stalled. Among the OECD, Australia is leading the economic recovery. However, another report from the international organization said that Canada might bounce back the highest among the group. Canada recently posted a report showing its employment number climbing to 290,000 in May despite the lockdown. The figure is expected to propel CAD in coming sessions.
On Tuesday, Switzerland posted a better than expected unemployment rate for May. Figure of unemployed people actively seeking jobs went up from 3.1% to 3.4%. However, this is way lower than the expected 3.7%. Aside from this, unemployed Swiss nationals who’re not seeking actively for any job went up 3.4% from 3.3% a month ago. This is below analysts’ expectations of 3.5% as well. The renewed confidence on the Swiss economy is expected to drive franc against the AUD in coming sessions. Meanwhile, Australia is still having a hard time to restart its economy. Analysts are expecting the Australian government and/or the Reserve Bank of Australia to further increase liquidity in the market. Aside from this, investors in the region prefer putting their money in the New Zealand economy. This was following the announcement by PM Jacinda Ardern that the country is now free from coronavirus.
Japan, the third-largest economy in the world, is expected to shrink by 6.0% this 2020. However, the United Kingdom might have just stolen the spotlight from Tokyo. The OECD expects Britain to contract by 11.4% under an optimistic scenario. The international organization pointed to the coronavirus pandemic and the UK’s divorce from the European Union as the main driver for this forecast. The United Kingdom currently has the largest number of infected citizens across the European region. This was despite the country sharing only one land border with the Republic of Ireland. Japan, on the other hand, began lifting several restrictions on May as the country successfully contained the virus. Another factor that investors were looking for on investing in the post-coronavirus world was the recovery plan by countries. Japan doubled the amount of its latest fiscal stimulus at $1 trillion, the largest in the country’s history.
Investors are back in the Japanese economy. This was following several reports showing foreign investment in Japanese bonds and stocks getting away from the negative territory. Figures were recorded at 1.07 trillion and 267.8 billion, respectively. The country also introduced its largest fiscal stimulus to date at $1 trillion to help the economy recover from the coronavirus pandemic. Canada has also a positive report this month with its job creation of 290K for the month of May. However, investors were struck with the 38.5% decline in corporate profits in Canada. Aside from this, Japan’s economic recovery plan is more sustainable. Canada has heavily relied on immigration to drive consumption and infrastructure in the country. Now that the world is in a great lockdown, recovery in Canada might take a longer time. With China currently in tension with the United States, investors might flock to Japan for protection from global uncertainty.
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