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Strong performance of initial jobless claims

07 Aug, 2020

The market is waiting for the non-farm data

Data and news released yesterday:

The coronavirus pneumonia has more than 19 million 220 thousand confirmed cases, and 19,224,403 cases have been diagnosed, with 710 thousand cases of cumulative deaths globally, and 5 million 20 thousand cases in the US.

The number of initial jobless claims in the United States on August 1 was 1.186 million, a new low since March 14; in the United States, the number of people who continued to apply for unemployment benefits for the week from July 25 to July 25 was 16.017 million, a new low since April 11, but still at a very high level.

The U.S. stock market closed higher, the U.S. dollar was basically flat, waiting for Friday's non-farm report, spot gold continued a record rise.

According to trump's "spoiler", the vaccine may be available around November 3. Earlier, Trump had a "tip off" that non-farm employment data would be strong.

The spokesperson of the US House of Representatives Pelosi said that progress has been made in the stimulus bill negotiations, which are actively under way, but there are still major differences between the two sides before the self-made deadline of Friday.

The Bank of England announced the interest rate resolution to keep the interest rate unchanged. The committee unanimously agreed to keep the interest rate and the total scale of asset purchase unchanged at 745 billion pounds to ensure the stability of monetary policy and financial market in the UK.

 

Market Volatility:

The U.S. dollar index fell 0.06% to around 92.79 yesterday; it fluctuated between +0.2%  and -0.3% in the session; after the data on the number of initial jobless claims was released, the trend of the US dollar index fluctuated most of the time.

The euro rose 0.12% to around 1.1877; earlier, it hit the highest level since 2018 of around 1.1916, but then lost momentum, as Germany's new crown confirmed cases reached the highest in more than three months.

The British pound rose 0.22% to around 1.3143, up 0.6% earlier to about 1.3186, the highest in nearly five months. Yesterday, the Bank of England announced the interest rate resolution to keep the interest rate unchanged.

The USD/JPY fell 0.05% to around 105.55; it hit a week's low earlier; focused on the July 27 with the low of 105.12, the USD/JPY showed a volatile trend, and the overall market sentiment was relatively high.

The spot gold hit a new record high to US $2069.78/oz. At the same time, gold ETF funds continued to flow into the record for more than a year. Further stimulus measures by governments and central banks will keep bond yields low and gold prices high.

The WTI crude oil futures in September fell 0.57% to settle at US $41.95/barrel, while Brent's October crude oil futures settled at US $45.09/barrel, down 0.18%.

 

Future forecast of CWG:

In the Asian session of this trading day, the Australian Federal Reserve announced its monetary policy statement; in the European market, Germany's trade account report was released after the quarterly adjustment in June; in the US session, the US non-farm employment population change after the quarter adjustment in July and the US July unemployment rate data were released, which undoubtedly have a guiding role in the future market trend.

Institutional Analysis: U.S. employment indicators show that the labor market recovery is slowing down, and may even worsen. After a surge in coronavirus cases across the United States, all the signs are that job growth will slow down in July, or even worse. Friday's employment report is expected to show a 1.5 million increase in non-farm employment in July. Economists' forecasts range from a drop of 600,000 to an increase of 3.2 million. The growth of new crown confirmed cases in the United States has accelerated since mid-June, especially in the South and West, leading to increased uncertainty in the economic recovery and stimulating many states to suspend or re implement epidemic prevention restrictions.

 

Financial calendar:

Economic data:

14:00 Germany June quarter adjusted trade account

20:00 Changes in non-farm employment population after July quarter adjustment in the United States/ US unemployment rate in July

Central Bank News:

09:30 RBA releases monetary policy statement

09:45 assistant chairman of the Federal Reserve of Australia Ellis speaks at the Australian business analysts Webinar

22:00 Boston Fed chairman Rosenberg testified in Congress on the main street loan program

 

CWG financial knowledge:

Changes in non-farm employment after quarterly adjustment in the United States (thousands): according to the U.S. Department of labor, the change in non-farm employment is a measure of monthly employment changes in all Non-farm enterprises. Total non-farm employment is the number of workers who produce about 80% of the entire U.S. GDP. It is the most important single item in the U.S. Department of labor's monthly labor market report. The data is one of the most important indicators of the U.S. economy and has a huge impact on financial markets. The increase of non-farm employment shows that employment growth will benefit the US dollar; conversely, if the non-farm employment continues to decline, it will be negative for the US dollar.