(Bloomberg) — Global markets are caught in a tug-of-war between optimism over better-than-expected economic data, and concern over the surge in coronavirus infections.
While currencies saw muted moves in early trading on Monday, the Australian dollar underperformed, dropping as much as 0.2%. The nation has seen a rise in infections recently. The big worry, however, is the U.S., where a surge in cases pushed global figures above 11.3 million.
Even though U.S. labor data showed a marked improvement in June, the dollar fell last week, ending the currency’s longest-winning streak since January. The Citi Economic Surprise Index for the nation soared to a record, while a similar gauge for major economies is at the highest level since 2017.
It’s a push and pull between positive and negative numbers that has lasted for weeks, said Stephen Innes, chief global markets strategist at AxiCorp, adding that markets may be headed for a “Let’s Make a Deal” moment, referencing a popular game show in the U.S. that started in the 1960s.
“Behind door number one sits the all-in trade from a vaccine discovery,” said Innes. “Behind door number two lies the relatively optimistic economic outcome, but it’s door number three, where the prophet of doom sits reminding us the virus risk will lead to a more significant growth hit in the third quarter.”
Economic releases from developed nations through Friday may help investors decide. Germany’s industrial production probably bounced back in May, as did Italian retail sales, based on estimates compiled by Bloomberg. PMI data from the U.S. may show a minor improvement.
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