FOREX TRADING STRATEGY JUL 13 - MORE CASES

Jul 13, 2020
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The first thing we must do on Monday is checking out all the most important events to better prepare the coming week. So I present you the followings:

Boost on yuan

Faced with the prospect of restricted access to the US dollar, China's solution is to let people use their own currencies more. The growing spillover in tensions between the US and China has entered the financial sector, triggering a new push from China to accelerate the use of the renminbi. A large number of influential government officials and market watchers in recent weeks have been trying to push the move forward, even more so after the new national security law in Hong Kong of China has caused the threat of retaliation from Washington.

While such drastic action is far from being taken by the United States - and potentially causing great damage to US interests and the entire global financial system - risk alone has raised itself. alarm bell. With nearly one trillion dollars of bonds and foreign loans; With $1.1 trillion of state-owned liabilities, access to the greenback is crucial for Chinese companies and lending banks. The renminbi accounted for 2% of global central bank reserves at the end of the first quarter.

Non-stop rise

Virus infections in the United States have increased to 3.27 million cases with nearly 56,000 new infections, less than the average daily increase in a week. Despite this, Florida has reported more than 15,000 cases, the largest daily increase of any state since the coronavirus pandemic began. Florida infections exceed record levels in New York, California and Texas, each of which has peaked nearly 12,000 cases per day to date. US Education Secretary Betsy DeVos said that "children should be allowed to return to school this fall." Meanwhile, one of President Donald Trump's coronavirus task force members said that infectious disease expert Anthony Fauci "does not necessarily have to think of the entire national interest" when suggesting counter In response to the pandemic, this reflected the tensions in the government before the November election. South Africa introduced a curfew and ban on excessive drinking after anti-virus rules were not applied.

Market on Monday

Asian stocks were set to rise on Monday as investors looked at the new earnings season starting on Wall Street for more clues about how companies are planning for the future. S&P 500 index futures also rose at the open. The money market witnessed quiet moves at the beginning of the session, while the Asia-Pacific stock index futures went up. Starting the reporting season this week, the banks helped the S&P 500 rise on Friday, when Treasury bonds reversed with an increase, pushing five-year bond yields to a record low. Oil is less volatile. Global stocks were trading near the highest level before the market collapsed in February. As governments gradually reduce the coronavirus closure to revive growth, new outbreaks are expected. are causing more restrictions and are causing some investors to cut their expectations about the pace of recovery. Meanwhile, this week, China will have a clearer picture of its progress in caring for the economy back to health by releasing its second-quarter GDP report, along with a slew of data. Data on industrial and retail output.

Good news on finance

Leaving aside the worrying increase in Covid-19 cases, the positive story for investors in developing economies remains intact. The Chinese economy may have returned to growth in the second quarter, bringing the yuan - the current barometer for global risk psychology - likely to increase after the biggest weekly rebound since January 2019. Goldman Sachs has revised their 12-month yuan forecast to 6.7 from 7, expecting the currency to benefit from a weaker dollar. That is likely to increase the momentum of this month of emerging market currencies. According to Deutsche Bank, the currencies of developing countries are very cheap and will probably catch up with other risky assets when the ratio of foreign debt holdings falls to a record low.

Voting in Hong Kong

Despite concerns about social extension and a new security law, hundreds of thousands of Hong Kong residents voted in two-day primaries held by democratic opposition parties. According to Au Nok Hin, one of the organizers said more than 580,000 people had voted electronically by 9pm on Sunday, more than triple the original target and accounted for more than 13% of the registered voters. Results will be announced on Monday. 

Opposition groups were hoping to attract at least 170,000 voters in informal preliminary elections to select county candidates for the Legislative Assembly elections in September. The opposition hopes to win a decisive victory in the district council election last November to ensure that a majority in the legislature will grant them the power to halt the agenda of the Chief of the Special Administrative Region - Carrie Lam. However, the new security law has created a risk that the Beijing-backed government will eliminate democratic candidates to prevent them from gaining enough seats.