Australian lockdowns affect 10 million-plus

Monday was a write-off as far as market movement was concerned. No data and only central bankers to watch meant traders were not enticed out of the lounge (bar maybe) to get involved in the forex activity.

There are some surprises in the news though. The Australian Dollar only ceded a little ground when it was announced that half of Australia’s capital cities were now in lockdown; a move that affects more than 10 million Australians. The Indian strain of covid-19, dubbed the ‘Delta’ variant, is proving to be highly contagious but, for those who have been vaccinated, rarely fatal, thank goodness. Nonetheless, the lockdowns will create the same economic suppression we have seen around the globe and the Australian Dollar, which starts the day at AUD 1.8350 against the Pound, may well weaken as the lockdowns take hold.

Japan unemployment rise as lockdown extended

We also had some surprises from Japan overnight. The unemployment rate rises from 2.8% to 3.0% in May; the highest level in 5 months. That was worse than expected and largely influenced by the government’s state of emergency being rolled out to a larger area. Oddly, retail sales remained strong; posting 8.2% growth year on year. The Yen gained a full point against the Pound; dropping from ¥154.50 to ¥153.10 before recovering a little. To ¥153.35 at the time of writing.

UK house prices rise at the fastest pace since December 2004

The little bounce we have seen this morning in the Pound’s value is driven by a 13.4% rise in UK home prices in the year to June, so says Nationwide. That’s the strongest rise since December 2004 and is an acceleration of an upward trend that started in 2019. The acceleration will have something to do with the imminent tax changes but it is not a flash in the pan. We will get the related mortgage and lending data this morning, so that too could heft the laggard Pound upwards. The Pound buys USD 1.3875 this morning and EUR 1.1640.

Speaking of the latter rate, EU data is plentiful but low on impact today. A slew of inflation and business sentiment indices will be interspersed with an EU service sector survey and then a speech from the head of the European Central Bank. A worrying sign matches what is happening in Australia, the delta variant is spreading rapidly across Portugal. We just have to hope those affected have been vaccinated and that it can be contained and not spread to other EU countries.

Later we get the US house price data and the Conference Board consumer confidence index. That has been trending higher since the initial shock of the covid outbreak but has not yet regained the pre-covid levels. I doubt it will do that today either, as so much of the US is still not back to full rude health. I suspect the USD won’t strengthen unless the index is above 120.

And finally, it was heart-warming to see a standing ovation at Wimbledon, not to a tennis star, but to Dame Sarah Gilbert, co-designer of the Oxford, AstraZeneca vaccine. Dame Sarah was an invited guest, along with many other invited key workers. A thoroughly well-deserved tribute. I guess you knew Wimbledon has started; it’s raining.

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