Europe’s coronavirus advantage over the US has been one of the prominent reasons for EUR/USD’s advance. The next moves mostly depend on the dollar side of the equation – with Non-Farm Payrolls standing out, Yohay Elam, an analyst at FXstreet, informs.
Key quotes
“Coronavirus cases are rising in all of Europe’s large countries – Germany, France, Italy, and Spain – with the latter suffering more than others. While this is under control, the tourism season and the recovery from the plunge in the second quarter can continue, supporting the euro. If lockdowns become less localized and more widespread – unlikely in the upcoming week – the common currency could come under pressure.”
“Retail sales figures for June stand out in the economic calendar. Consumption and the broader services sector have been hit harder than the manufacturing sector, and investors would want to see an ongoing recovery.”
“The virus remains the boss – impacting how consumers behave if restrictions are imposed or lifted, and politics. Daily figures from Florida, California, Texas, and the whole of America will likely remain of interest. Tentative signs of the flattening of the case curve are compared unfavorably with a rising death curve.”
“Democrats and Republicans are set to hold talks through the weekend – attempting to agree on the next stimulus package. The sooner an agreement is reached – and the larger the package is – the better for the economy and the dollar. If negotiations drag while millions of unemployed Americans do not receive extra help from the government, it may trigger a drop in consumption – a vicious cycle for the economy.”
“Economists expect headline NFP to show another month of multi-million job gains – or better-said, restored. However, given the increase in COVID-19 cases from mid-June, a negative NFP cannot be ruled out. A loss of positions implies more action from lawmakers, which would turn bad news into good news, but that cannot be counted on. Apart from the headline figure, an increase in the standard unemployment rate, and in the real unemployment rate’ – which counts also those too discouraged to look for a job – will be closely watched. Wages remain skewed to the upside due to tot he disproportional hit to low-earners.”
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