Currency Call Mid-Day Update (05 July 2021)
During today’s Currency Call, Gim Hong highlighted the following points:
- U.S. jobs report released has a mixed interpretation.
- Despite the increase of 850,000 jobs in the U.S. in June, labor force participation rate remains unchanged and is lower than the pre-pandemic level, indicating that there is still an amount of people who are not looking for jobs.
- Although unemployment rate inched higher, the jobs report highlighted that this is due to more people leaving their jobs voluntarily and also due to a rise in the number of job seekers.
- The increase in average hourly earnings is likely due to firms increasing wages in an attempt to lure workers. Nonetheless, average workweek has declined.
- OPEC+ meeting was further delayed to Monday due to the unresolved issue of the United Arab Emirates wanting its production baseline to be increased.
- At the moment, all members of the OPEC+ except the UAE have agreed to increase supply by 400k barrels-per-day from August to December.
- Failing to agree on a quota production plan may lead to a disruption in the oil market.
- The Reserve Bank of Australia (RBA) will be announcing their monetary policy decision tomorrow at 1230 (GMT+8). A press conference will also be held at 1400 (GMT+8).
- Likely the central bank will be adopting an approach whereby frequent reviews of bond purchases can be carried out based on new economic outlook, giving it more flexibility.
- Nonetheless, the RBA may also warn about the COVID Delta variant that may impact on the central bank’s decision in the future.
Scott highlighted the following points:
- U.S. dollar index underwent a pullback last Friday after the release of the U.S. nonfarm payrolls data.
- U.S. nonfarm payrolls data may continue to be high next month.
- As the U.S. market will be closed today due to Independence Day, the dollar index is likely going to range across for now.
Jin highlighted the following points:
- The RBA is unlikely going to carry out any changes to monetary policy due to the new wave of lockdowns amid the spreading of the COVID Delta variant.
- The U.S. ISM non-manufacturing PMI data that will be released tomorrow at 2200 (GMT+8) may lead to a slight retracement of the U.S. dollar index to its support level.
- The FOMC meeting minutes that will be released this Thursday at 0200 (GMT+8) is unlikely going to shock the market too much at this time.
- Look for selling opportunities of NZD/USD below the 0.70000 level.
- Look for selling opportunities of AUD/USD below the 0.75000 level.
During the day, AUD/USD and NZD/USD were little moved.
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