By the close of trade on Thursday, the South African rand strengthened against the US dollar.  Today is Independence day [Observed actually tomorrow the 4th July] in the United States of America.  Just how bad is the economic impact of the COVID-19 pandemic? In the US and International level, things are tough, but perhaps a little more manageable than many market analysts had feared at the onset of the crisis. Corporations are reporting earnings that are better than Wall Street expected, jobs were added, not lost, in May, and central banks and fiscal policymakers stepped up with robust aid packages.

  • Investors’ appetite for riskier assets increased following positive economic data from the US.
  • Total nonfarm payroll employment rose by 4.8 million in June, and the unemployment rate declined to 11.1 percent, the U.S. Bureau of Labor Statistics reported today. These improvements in the labor market reflected the continued resumption of economic activity that had been curtailed in March and April due to the coronavirus (COVID-19) pandemic and efforts to contain it. In June, employment in leisure and hospitality rose sharply. Notable job gains also occurred in retail trade, education and health services, other services, manufacturing, and professional and business services.
  • New applications for traditional jobless benefits continued to slow for the week ended 26 June. Factory orders rose for first time in three months on a monthly basis and the trade deficit widened in May, as the COVID-19 pandemic pushed exports to their lowest level since 2009.
  • Chinese service providers signaled the sharpest increase in activity for over a decade in June. Furthermore, total new orders rose at the quickest pace since August 2010 and new export work expanded for the first time since January. Firms widely reported that overall market conditions had continued to improve following an easing of measures related to the coronavirus disease 2019 (COVID-19) pandemic. Meanwhile, employment fell again, albeit modestly, with some firms noting that staff had left roles voluntarily.
  • The yield on benchmark government bonds fell yesterday/on Friday. The yield on 2026 bond rose to 7.62%. Further, the yield on 2023 bond advanced to 4.92% while that for the longer-dated 2030 issue rose to 9.23%.

In early trade on Friday, the US dollar is trading 0.1% higher against the South African rand at R16.9801, while the euro is trading 0.1% higher at R19.0938.   The British pound has marginally declined against the South African rand to trade at R21.1582.

By the close of trade on Thursday, the euro declined against most of the major currencies.

  • British factories are increasingly planning to lay off workers, a warning sign for the economy as it tries to recover from the coronavirus pandemic, an industry survey showed on Friday. Some 46% of manufacturers expect to make redundancies over the next six months, up sharply from 25% in May.
  • On the data front, unemployment rate in the eurozone slightly edged up, but came in less-than-expected for May, as lockdowns gradually eased in the region, although the rise was more pronounced among women and youths. Meanwhile, producer price index (PPI) fell more-than-expected on a monthly basis in May.

In early trade on Friday, the euro has advanced 0.1% against the US dollar to trade at $1.1245, while it has gained 0.1% against the British pound to trade at GBP0.9024.

Below is a link to a very detailed Covid-19 picture giving stats and graphs.