Currency Call Update (05 July 2021)

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Currency Call Mid-Day Update (05 July 2021)

During today’s Currency Call, Gim Hong highlighted the following points:

- U.S. jobs report released has a mixed interpretation.

- Despite the increase of 850,000 jobs in the U.S. in June, labor force participation rate remains unchanged and is lower than the pre-pandemic level, indicating that there is still an amount of people who are not looking for jobs.

- Although unemployment rate inched higher, the jobs report highlighted that this is due to more people leaving their jobs voluntarily and also due to a rise in the number of job seekers.

- The increase in average hourly earnings is likely due to firms increasing wages in an attempt to lure workers. Nonetheless, average workweek has declined.

- OPEC+ meeting was further delayed to Monday due to the unresolved issue of the United Arab Emirates wanting its production baseline to be increased.

- At the moment, all members of the OPEC+ except the UAE have agreed to increase supply by 400k barrels-per-day from August to December.

- Failing to agree on a quota production plan may lead to a disruption in the oil market.

- The Reserve Bank of Australia (RBA) will be announcing their monetary policy decision tomorrow at 1230 (GMT+8). A press conference will also be held at 1400 (GMT+8).

- Likely the central bank will be adopting an approach whereby frequent reviews of bond purchases can be carried out based on new economic outlook, giving it more flexibility.

- Nonetheless, the RBA may also warn about the COVID Delta variant that may impact on the central bank’s decision in the future.

Scott highlighted the following points:

- U.S. dollar index underwent a pullback last Friday after the release of the U.S. nonfarm payrolls data.

- U.S. nonfarm payrolls data may continue to be high next month.

- As the U.S. market will be closed today due to Independence Day, the dollar index is likely going to range across for now.

Jin highlighted the following points:

- The RBA is unlikely going to carry out any changes to monetary policy due to the new wave of lockdowns amid the spreading of the COVID Delta variant.

- The U.S. ISM non-manufacturing PMI data that will be released tomorrow at 2200 (GMT+8) may lead to a slight retracement of the U.S. dollar index to its support level.

- The FOMC meeting minutes that will be released this Thursday at 0200 (GMT+8) is unlikely going to shock the market too much at this time.

- Look for selling opportunities of NZD/USD below the 0.70000 level.

- Look for selling opportunities of AUD/USD below the 0.75000 level.

During the day, AUD/USD and NZD/USD were little moved.

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