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The United Kingdom’s economic recovery had great momentum until it reported what was supposed to progress in its construction industry. Surveys found that instead of a lift to 58.5 from 58.1 seen in July, the HIS Markit/CIPS UK Construction Purchasing Managers’ Index had fallen short to 54.6. It showed that growth in the commercial and housebuilding sectors slowed, showing a possible employment decline throughout the month. The latest setback was the first it had seen since it reopened back in May, which confirmed that jobs were cut for the 17th time in a row. The City held back on its inflation expectations for the rest of the year, leaving the figure at 2.9%. Meanwhile, the Swiss franc is projected to strengthen from dollar weakness. The most resilient economy in the world has seen a relatively shallow 8.2% slump in the Q2 based on monetary policy, low-carbon economy, human capital, and most notably: its labor market efficiency.
Even a vaccine might not be able to repair Australia’s economy. Economic data will be quiet down under in today’s trading, but since it had reported a record GDP slump for the second quarter of 2020 at a 7% increase quarter-over-quarter led by its second wave of coronavirus infections, it looks like Australia going further downwards. The news rattled markets because it had been the only major economy to avoid a recession during the financial crisis in 2008. Meanwhile, the euro is currently going through a currency spike problem. Factory orders in Germany were sliced way lower than the market anticipated by an outrageous 2.8% for the month of July, a plummet from the 28.8% recorded in June. Ironically, this could inflame the euro in the near-term if the European Central Bank won’t be able to squash its rise to help muffle its implosion in the long-term because it could affect its exports figures, a major driver of its economic growth.
The euro has jumped by 12% in five months since the beginning of its coronavirus lockdowns. The pair even reached above $1.20 for the first time in two years earlier this week, and it’s bound to witness more as economists’ outlook on the greenback remains red. This could be further proven by the United States’ nonfarm payrolls to be reported later today. After the number of people employed plummeted by as much as 3 million in July to 1,763 million, the figure is expected to fall to an even deeper slump to 1.4 million today. Now that the Federal Reserve is fulfilling its promise that it’s working on its employment instead of stimulus packages, its unemployment rate is expected to inch lower form 10.25 to 9.8%. But this won’t be able to help the greenback reach into a bullish market once again no thanks to the pessimistic outlook for its annualized average hourly earnings for August, which could trip lower from 4.8% in 2019 to 4.5% in 2020.
The Japanese yen has many reasons to fall against other major currencies near-term. Shinzo Abe had just retired in the middle of a pandemic, kept his Abenomics stimulus package unripe, and it had also just experienced its biggest economic slump on record. However, upcoming economic data in the United States has proven otherwise. The most powerful currency’s appeal has evaporated no thanks to its record low interest rates, and the Federal Reserve had promised to shift its focus from fiscal stimulus to employment rates for the rest of the year. Investors might find its unemployment rate for August to inch down to 10.2% to 9.8%, a number much slower than how the coronavirus is affecting jobs data and nonfarm payrolls, which is expected to fall by more than 300 thousand from 1,763K to 1,400K. It wouldn’t look good, considering that even its average hourly earnings are expected to fall from 4.8% in August 2019 to 4.5% in August 2020.