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Economic Reports You Shouldn’t Miss This July |
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11th Jun 2020

Economic Reports You Shouldn’t Miss This July

As of June 2020, many economies began to gradually re-open which has led to a surge in investor optimism. With the easing of lockdown measures and border controls, business activities are picking up again and as will consumer spending.

Major indices on Wall Street and the Asian markets are on an upward trajectory, riding high on this renewed optimism. The S&P 500 gained 5% in the first week of June, its biggest weekly gain since April of this year. On June 8, the Nasdaq Composite added 1.1% to set a new closing high of 9924.75, while Japan’s Nikkei 225 surged 1.4%. Hopes of an economic recovery in the near term have been further driven by a surprisingly positive US jobs report, along with news from the European Central Bank (ECB) that it would expand its stimulus program and positive developments towards a European recovery fund.

However, the pandemic is far from over, with infection cases on the rise in many parts of the world. Economic reports here on in could be positively surprising like the US jobs report for May 2020 or completely devastating. Traders need to watch out for these events, which could spark volatility in the forex and cryptocurrency markets. By timing their positions according to these news releases, they could find plenty of trading opportunities.

Here are some important news releases to look out for in July 2020.
The global markets rallied as the US economy surprisingly added 2.5 million jobs in May 2020, beating expectations of an 8 million job cut. The US employment levels amidst the pandemic have been compared to levels last seen in the 1930s Depression era. The next report will be crucial to determine whether the recovery could happen faster than expected. Analysts predict a 600K cut in figures for June 2020.

The NFP is a popularly tracked report by traders of all types of assets. It not only impacts the US stock market, but also the European and Asian equity indices. Currencies that will likely show major volatility following the report are the US Dollar (USD), Japanese Yen (JPY) and the British Pound (GBP).
The US trade deficit widened to $19.4 billion in April 2020, the biggest trade gap in 8 months. This gap was due to the decline in exports, border closures and supply chain restrictions. A small decrease in the gap is expected as the economy re-opens gradually.

The reports are likely to cause ripples in the US stock market, along with the USD and JPY.
In the June meeting, the RBA left its cash rate unchanged at 0.25%, as expected. The Australian economy is facing its biggest contraction in decades. A further decrease in interest rates could spark volatility in the Australian Dollar (AUD).
The annual inflation rate in China fell to 3.3% in April 2020, from 4.3% in March 2020, due to declining oil and pork prices. For May 2020, the market expects further decline to 2.6%. 

\China’s economy impacts Australia, Japan, Hong Kong and the US, its largest trading partners. Some volatility can be expected in the Australian Dollar (AUD), Hong Kong Dollar (HKD), Japanese Yen (JPY) and the US Dollar Index. 
With a 13% decline in exports, the UK registered an expanding trade deficit of £6.68 billion in March 2020. With the rise in oil prices, the deficit could narrow to £4.6 billion in May 2020. This report will be important to figure out the level of economic decline in Q2 2020.

The UK indices like the FTSE 100 and FTSE 350 will likely be impacted, along with European indices like the DAX30 and Euro Stoxx 50. Major volatility could be expected in the Pound and Euro. 
Virus spread and low oil prices kept the US annual inflation rate low at 0.3% in April 2020, a sharp decline from 1.5% in March 2020. Core CPI is expected to fall 1.3% YoY in May 2020. Projections for June 2020 stand at a slight increase of 0.5% in annual CPI and 1.8% in core CPI.

Traders can expect volatility in the US Dollar rate, along with that of the Japanese Yen. 
The Chinese economy contracted 6.8% YoY in Q1 2020, after registering 6% growth in Q4 2019. While the economy might not be able to assume its pre-pandemic levels so soon, the second quarter contraction could be 4% YoY, a slight increase.

The Australian S&P/ASX 200 and the US Dollar may see some volatility.  
The Federal Reserve is likely to keep its fed funds rate steady at 0%-0.25%, to support the economy. 

Any change in interest rates will affect the valuation of the US Dollar. The decision taken by the US Federal Reserve will be a market moving event, impacting all major indices and currencies around the world, including the EUR, GBP and JPY.
The Eurozone economy declined 3.6% in Q1 2020, following a sharp contraction in the German GDP, of 6.3%. For Q2 2020, Eurozone projections are grim, at a 12.5% decline on a quarterly basis and 14.7% decline on an annual basis.

Euro volatility could surge after the report. GBP may also experience fluctuations. 

Whether you are trading forex or Bitcoin, economic reports can impact your trading plan. While increasing volatility during major report releases can provide trading opportunities, it can also lead to losses, which is why robust risk-management practices are crucial. 

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