- 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
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.
AUD/USD – Bullish
The AUD/USD has been going on a cautious rally over the past week, trending well above the 15-day moving average. Expect these gains to continue well into next week. A key resistance level to test will be the 0.698 level, which has been tested twice over the past month. Support levels to fall back on include the 0.689 level (which the 15-day MA sits at currently) and the 0.683 level, the price when the reversal occurred.
USD/JPY – Bullish
USD/JPY have gained the level at 107.358 and we could likely see a retest of previous support lost at 107.919. Furthermore, with the US adding a record 4.8million jobs in June decreasing unemployment by 2.2 points since May, the dollar has a positive outlook.