- China has imposed a new security law for Hongkong which allows Beijing to override the Hong Kong judicial system.
- In response to China’s imposition of new security law, the US house of representatives has passed a bill that penalizes banks for conducting business with Chinese officials associated with the new security Law.
US Unemployment Recovery
- Recent federal data, released on the 2nd of July, showed US unemployment has dropped to 11.1% from 13.3% in May.
- Despite the drop in US unemployment, the resurgence of COVID infections could hinder the efficacy of decreased unemployment and retail strength may be compromised.
Chinese Services PMI
- Chinese services PMI hit a 10 year high of 58.4 from May’s 55 signals a strong rebound from the effects of coronavirus.
Optimism as U.S Unemployment figures exceed forecasts, undercut by Covid-19 outbreak
The U.S. non-farm payroll data released on Thursday exceeded most forecasts, with employment rising by 4.8 million in June and unemployment falling to 11.1%, from 13.3% in May. This is following a gain of 2.699 million non-farm payrolls in May. The highest gains were in the leisure and hospitality sector, reflecting restrictions being loosened in June.
Key arguments against a bullish dollar include Covid-19 hotspots in major states including Arizona, California, Florida and Texas, which have already shut down bars that had only just re-opened. The NFP is still down 14.7 million jobs since February. For the 14th week in a row, over 1 million people filed for first-time unemployment benefits, signalling a steady flow of growing unemployment.
While the unemployment gains may be a positive sign for the U.S., there are still several obstacles that prevent a swift economic recovery.
Over the past week, the EUR/USD has been consolidating into a range, consistently oscillating between a support level of 1.117 and resistance level of 1.131. The pair remains well above the 50-day moving average but has consolidated with the 15 day moving average. Expect to be able to profit off the pair using a range-bound trading strategy over the next week, but pay close attention to hourly candles in the event that an upwards or downward trend form.