Dollar weaken on Tuesday as global economic is recovering
Dollar weakened against other currencies as the economic optimism with comments from The FED chairman and economic fundamental data rising and the hopes for mass production of vaccines for Covid-19. The economic forecasts presented by Jerome Powell said that the economy's growth has a chance of falling between 20% – 30% but not going into depression. Powell added that economic growth will start to stabilized again in the second half of the year and continue to rise until the end of the year. It is expected to recover completely in the upcoming February 2021, even allowing it to be better again.
Moderna Therapeutics (US biotech company) reported the test results against 45 patients. They are showing an increase in antibodies to the virus Covid-19 after receiving the vaccine. If laboratory tests continue to show positive results, then in the beginning of 2021 these drugs will be available in the market. The president of China – Xi Jinping committed to help other countries with $2 million fund to tackle the Covid-19 for the next two years. In China, the development of the vaccine has been tested to 2,000 Covid-19 patients. China producers have entered the second testing stage. The third testing stage is between July and August. The new Moderna production vaccine is at the first test stage.
US domestic economic data has begun to show signs of recovery. This comes from a survey of consumer sentiment from University of Michigan which increase to 73.7, this flip the falling forecast of 68.0 from the previous period of 71.8. The manufacturing index in New York is also better. It is at 48.5 which is better than the estimated 65 and the previous period of 78.2. The Retail Sales report is still negative which is last month data when most of the US still in lockdown and social distancing. In the housing sector, NAHB Index, also increased 37. This is better than the estimated 35 and the previous period of 30. Tonight, the housing sector data will be released again. The market will also hear the testimonials from The FED chairman again with the Minister of Finance – Steven Mnuchin and also the G7 meeting.
Meanwhile, Euro are strengthening against Dollar after German chancellor - Angela Merkel and France President - Emmanuel Macron agreed to disburse €500 million for economic recovery to the most severe country affected by Covid-19. The France-German partnership was referred as the main step in solving the pending budget issues in the EU. This was as well be the blueprint for other work agreements. Moreover, it also authorizes the European Commission to borrow funds using the European Union name. This is the first step for the establishment of Euro bonds or Eurobond because if it is agreed, it will allow the European Union to raise funds collectively. Today, ZEW economic sentiments data will be released as well as ECOFIN and G7 meeting.
On the other hand, Pound Sterling rose after weakening to the lowest level in the last 8 weeks. This was shadowed by the chances of negative interest rates adoption from the central Bank of the UK (BOE) and also the disappointing return of the post-Brexit negotiations. The negotiations backwards after Brexit was increasingly threatening to not to cooperate after the transition period. This is not only for the market maker and businesses, but also globally while fighting against the Covid-19 pandemics. Meanwhile, the head of the BOE economist still denies the possibility of adopting negative interest rates, but the market is speculating on it. These two have the potential to drag Britain into the worst economy in the last 300 years.
In the Ministry of Budget report showed that there is a possible decline in economic growth by more than 30% from the pandemic. Today the labor sector data will be released which is estimated negative as the economy has not been seen due to the Covid-19 pandemics.