Market Wrap

Market Wrap: royals' pleas to big pharma, and how FX majors moved

Annie Charalambous, Friday, 7 May 2021

ETX Capital Market Wrap

This week has been rather eventful, despite the relatively stable values of most major currencies against each other.

Weaknesses in the price of the Australian dollar became evident as long ago as Monday, when it slid slightly against the US Dollar and just about kept itself above the 0.7700 threshold, while USD/CAD settled near weekly lows in the 1.2280 price zone.

Why the focus on the Australian dollar? That became much more evident later in the week when China's government acted against Australia as patience wore thin over Australian politician Marise Payne's continual barrage of complaints on the public stage criticizing China for human rights abuses. China is Australia's biggest trade partner, so biting off the hand that feeds it, Australia now faces an indefinite halt to the economic dialog between the two countries, resulting in a considerable fall in the value of the Australian dollar compared to its major currency counterparts in the Northern Hemisphere by Thursday.

As Wednesday drew to a close, data became available that showed that the Canadian dollar's value against the US Dollar rose considerably by more than 3.7% since the end of last month. The US ADP Nonfarm Payrolls and Canadian employment data were made available at the beginning of May, perhaps having a bearing on this substantial movement.

On British soil, a bank holiday began the week, and the ensuing Tuesday being a day of speculation about the wider economy, with analysts having made the bold statement that the British economy is set to experience the largest boom since 1948. That is quite a prediction, however it is important to consider whether that is the highest boom compared to existing circumstances. If that's the case, it may not mean a huge increase in fortunes, just a high percentage gain from the current situation which is the worst economic recession in 300 years due to lockdowns. More on that in this article.

In the celebrity space, which is becoming increasingly more entangled with the business world, two major occurrences that could cause volatility are the unexpected split between Bill and Melinda Gates, his wife of 27 years, and former Royals Harry and Meghan having written letters to the CEOs of three big pharmaceutical companies. Speculation is that Bill Gates, who does not have a prenuptial agreement, and is a 1.36% shareholder in Microsoft, may be exposed to a huge settlement from his $130 billion personal fortune and could realize some of his assets, potentially putting a lot of Microsoft shares on sale. Harry and Meghan's whimsical plea to big pharma to waive patent and intellectual property rights on their medicines, if listened to, would potentially decimate the value of their stocks as a firm that spent resources on development but is unable to monetize it is a firm with no value.

Coming up next week, who knows what the Euro will do against the Pound after the clearly-staged kerfuffle between the United Kingdom and France, in which Naval ships were deployed in Jersey. Will each nation apply some degree of trade sanctions on import and export of goods, perhaps affecting the settlement of FX in Euro and Pounds and causing volatility, or will it be all forgotten and a pat on the back exchanged by President Macron and Boris Johnson? We can only wait to see.
 

Mark your Economic Calendar

  • The National Australia Bank (NAB) has its Business Conference scheduled for Monday, May 10th, at 1:30 am GMT, and Retail Sales for the month of March will be announced in Australia at the same time. At 23:30 GMT, Japan's Household Spending on a monthly basis will be released by the Japanese government, possibly affecting movements in the Yen.
  • At 20:30 pm GMT on Tuesday, the US will announce the API Weekly Crude Oil Stock, which is estimated to be down by 7.688 million barrels over last week, and with oil having been volatile this week, we may see another week of fluctuations.
  • On Wednesday at 7.00am, Britain will drop a bombshell by announcing that its domestic trade balance for March is at a deficit of 16.44 Billion pounds, and its EU trade balance for the same month is at a deficit of 10.73 billion pounds. At 23:50 pm GMT, Japanese bank lending figures will be announced, which are estimated to be up 6.3% compared to the past twelve-month period.
  • Come Thursday, Greece's Unemployment estimate languishes at 15.8% with the official statement to be made on Thursday at 9:00 am GMT, and set to potentially impact the Euro.
  • Finally, Friday at 12:30 pm GMT, Canada is set to release its new Motor Vehicle Sales figures, which are estimated to be up an astonishing 96% over the previous month, which could be a strong sign of an upward surge on consumer spending in a previously heavily locked-down Canada. The country is a huge producer of automobiles, thus this figure should be a boon to the domestic economy and further strengthen this week's huge gains by the Canadian dollar over its rival south of the border.

 

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