OVERNIGHT NEWS
* Euro retreats from highs post-ECB, EU agreement on Recovery Fund unlikely today/ tomorrow, deal at next summit on 27 July dependent on compromise over composition of subsidies/ loans, conditionality, EU rebate
* Global debt balloons from 320% in 4Q to record 331% of GDP in 1Q, largest increases in Canada, France and Norway in G10 and Chinese non-FIs in EM; debt swells to 392% of in GDP in in developed markets and 230% in EM (IIF)
*Fed’s Evans: case for positive economic momentum in 2H, sees extended period of high unemployment ahead and jobless rate of 9% to 9.5% by the end of the year
* FX weekly performance: NOK and SEK excel in G10 but NZD and GBP lag; CLP top in EM but losses for IDR, THB and RUB
* US May [TIC flows: https://ticdata.treasury.gov/Publish/mfh.txt]: China raises UST holdings by $10.9bn to $1083.7bn, Japan reduces holdings by $5.8bn to $1,260bn
* Nikkei -0.3%, EUR 10y IRS unch at -0.195%, Brent crude -0.2% at $43.3/b
Global debt rose by 11ppts to a record 331% of GDP in 1Q
El sentimiento del mercado sigue siendo el principal driver
El USD logró cerrar la sesión al alza frente a todas las divisas del G10, ya que la renta variable mundial retrocedió, lo
que confirma que el sentimiento del mercado sigue siendo el principal catalizador. Las expectativas de la política
monetaria y los datos macro se han convertido en factores secundarios, como lo confirmaron ayer una vez más la
reunión del BCE y las publicaciones de datos. Por lo tanto, el estratega en materia de divisas sigue pendiente del
comportamiento de la renta variable en lugar de los tipos y los bonos para explicar y tratar de anticipar el
comportamiento de las divisas globales. La evolución de la pandemia y la respuesta política, junto con la
inestabilidad geopolítica y los contextos políticos internos, seguirán influyendo en el sentimiento del mercado y en
el comportamiento de los mercados de divisas.
El COP retrocede con el precio del petróleo al extenderse la pandemia
El COP fue la divisa con el peor comportamiento de LatAm, retrocediendo alrededor de un 0,5% el jueves. Hubo
una divergencia en los precios de las materias primas, ya que los precios del cobre subieron y los del petróleo
bajaron. Además, la aversión al riesgo general del mercado que se extendió a los ME castigó al COP. Colombia, de
alguna manera, ha estado en el punto de mira, y el número de nuevos casos de COVID-19 registrados ha ido
subiendo poco a poco. Una de las preocupaciones es que Colombia todavía está por detrás en la curva del COVID19, lo que podría afectar negativamente a la recuperación económica, castigando finalmente a los mercados y
haciendo que los tipos bajen aún más.
GLOBAL
*U.S. stock-index futures rise slightly amid mixed global markets
*Trump Insists On Payroll Tax Cut In Next Stimulus: Officials
*NY Headed For Phase 4 Monday; Decision By 4PM Friday: Cuomo
*U.K. Prime Minister Boris Johnson to announce extra +3 billion pounds to prepare the U.K. National Health Service for second peak in cases
*U.K. Prime Minister Boris Johnson also due on Friday to announce plans to ramp up antigen testing for the virus to 500,000 a day by the end of October to boost its test and trace program
*ECB policy makers didn’t agree on whether they expect to use the full amount of their 1.35 trillion-euro ($1.5 trillion) pandemic emergency purchase program
*China Regulator To Take Over 6 Firms Including Huaxia Insurance
COLOMBIA
*11am: (CO) May Imports CIF Total, est. $2.88b, prior $3.1b
*11am: (CO) May Trade Balance, est. $950.0m deficit, prior $1.07b deficit
*3pm: (CO) May Economic Activity NSA YoY, est. -13.75%, prior -20.06%
Tepid trading overnight, with little inspiration towards the end of the week. Our focus is on EUR, as the Special European Council Summit gets underway in Brussels. Hopes for an EU recovery fund breakthrough may need to be tempered after Merkel acknowledged it would be “very, very difficult”. However we still like EURUSD, and an agreement in principle could provide a boost.
US saw a record 77k cases overnight, with Florida and Texas seeing rising fatalities. New York City will see the final decision on Phase IV reopening, while speculation that Texas could re-enter shutdown have been explicitly denied by the Governor. ILS sees new lockdown measures imposed, while rate cuts for ZAR and RUB next week should not surprise.
Risk appetite is in the directionless doldrums this morning, provoking no
meaningful action in FX. The main event is the gathering of EU leaders but while
the EUR has rallied over the last month in anticipation of an agreement, there is likely
to be market patience about when that agreement may be secured. COVID-19
continues to take it human toll with a record daily increase in new cases globally and
in the US, and renewed examples of fresh outbreaks and containment measures.
However, the grip of COVID-19 on the market no longer seems so beholden to the
case count but rather to news around vaccine development. The data calendar is
light with only really US consumer confidence data for July offering interest (see
below). It looks like it should be a quiet finish to the week.