Foreign Exchange Market Update

August 7, 2020

United States (US): Employment Jumps More Than Expected In July

Employment in US increased by more than expected in the month of July, according to a report released by the Labor Department on Friday. The Labor Department said employment jumped by 1.8 million jobs in July after surging up by 4.8 million jobs in the previous month. The bigger than expected spike in employment came amid a sharp increase in employment in the retail sector. Notable job growth also occurred in the leisure and hospitality, government, professional and business services, other services, and health care sectors. With the continued increase in employment, the unemployment rate dropped to 10.2% in July from 11.1% in June. 08/07/2020 –07:30AM (RTTNews)

Australia: Economy To Recover Slowly

Australian dollar traded at 0.7176 U.S. cents at 9:00 am PST. 

RBA said in its quarterly Statement on Monetary Policy, Australia's economy is set to log a slow recovery given the ongoing spread of the coronavirus. According to baseline scenario of RBA, GDP is expected to contract by around 6% over the year to December 2020, but then grow by around 5% over 2021. The recovery is expected to be slow and uneven, and GDP will probably take several years to return to the trend path expected prior to the virus outbreak. The recent outbreak of the coronavirus in Victoria and the associated introduction of restrictions on activity are likely to reduce national GDP growth by at least 2% points in the September quarter. A contraction in demand represents an enormous shock to the labor market. The unemployment rate is expected to rise to almost 10% over the next six months and gradually decline to around 7% over the latter part of the forecast period. Underlying inflation is expected to remain below 2% over the next couple of years. 08/07/2020 - 01:46AM (RTTNews)

United Kingdom (UK): UK says it's confident of Brexit trade deal as EU changing tone

British Pound traded at 1.3048 against USD at 9:00 am PST.

UK’s top minister overseeing Brexit talks said on Friday he was confident a free trade deal would be clinched with the EU as there had been a distinct change of tone from the bloc in recent weeks allowing progress to be made. Failure to reach a deal would convulse global trade just as the world comes to terms with the economic destruction sown by the novel coronavirus. The EU is willing to compromise by softening its demand that UK heed the bloc’s rules on state aid in the future. Brussels could go for a compromise entailing a dispute-settling mechanism on any state aid granted by the UK to its companies in the future, rather than obliging London to follow the bloc’s own fair-competition rules from the outset. UK and the EU have planned more trade negotiations all the way until October 2nd , less than a fortnight before a summit where the bloc hopes to endorse any agreement with London. 08/07/2020 - 05:19AM (RTTNews)