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Today's market event: Fed minutes with "small non-farmers" attack gold bulls brewing a bigger explosion beware of new news from China and the United States
Jul 1,2020 19:37CST
The content below was translated by Tencent automatically for reference.

SMM: Wednesday (July 1) Asian market, the dollar index basically stable, spot gold remains strong, gold prices are still above $1780 / oz. For this trading day, investors will pay attention to the minutes of the Fed's June meeting. If the minutes are dovish, gold prices are expected to rise further. In addition, investors will usher in the US ADP employment data, known as "small non-farmers", on Wednesday night, which is also expected to trigger market conditions. In addition to the Fed minutes and ADP employment data, investors will also continue to monitor the development of the epidemic and the geopolitical situation, including Sino-US relations, and any sudden news could lead to market volatility.

Gold prices surged to their highest level in nearly eight years on Tuesday, as fears of a resurgence of new crown virus cases grew, maintaining safe-haven demand for gold. Spot gold closed above $1780 an ounce on Tuesday, rising as high as $1785.60 an ounce, the highest level since October 2012.

Tai Wong, head of fundamentals and precious metals derivatives trading at BMO, said commodity trading advisers were encouraged by gold's rise to a high of $1780 an ounce, providing the basis for gold to rise to $1800 an ounce in the short term.

Jim Wyckoff, a senior analyst at Kitco Metals, said "bullish fundamentals of the gold market remain, including new crown pneumonia, which is still driving safe-haven demand, and record central bank stimulus measures", which could trigger inflation in the future.

According to the results of the gold weekly survey released by Kitco News on Friday, gold prices should maintain their recent upward momentum as the new crown pneumonia pandemic continues to spread and worries about the economy.

Of the 18 Wall Street professionals who took part in last week's survey, 12 (67%) expected gold prices to rise. Four people (22%) predicted that the price of gold would fall. The other two (11 per cent) expect gold prices to consolidate or remain unchanged.

George Gero, managing director of wealth management at Royal Bank of Canada, said he continued to expect gold prices to break through $1800 an ounce.

"I expect gold to rise to a higher price this week," said Charlie Nedoss, a senior market strategist at LaSalle Futures Group. He said the dollar seemed to have "peaked" and that gold was forming good technical support.

Edward Moya, senior market analyst at brokerage OANDA, said: "We are likely to see gold break through the $1800 / oz level. Gold fundamentals are strong, coronavirus cases are increasing, there is no vaccine, and stimulus measures by major central banks around the world have raised inflation concerns. "

The tense relationship between China and the United States is also good for the price of gold.

In addition to concerns about the new crown epidemic, the current strained Sino-US relations have also put the market in a risk-averse mood, which is good for gold prices.

Afshin Nabavi, senior vice president of precious metals trader MKS SA, said the increase in coronavirus cases in the United States and the ongoing conflict between China and the United States "point to safe-haven buying of gold."

On Monday, the United States banned the export of high-tech products to Hong Kong. On Tuesday, the Chinese government signed Hong Kong's national security law. Hong Kong has maintained a high degree of autonomy since it ceased to be a British colony in the late 1990s. Us officials have said the new law will reduce Hong Kong's independence.

The 20th meeting of the standing Committee of the 13th National people's Congress of China voted unanimously to pass the Hong Kong National Security Law on Tuesday morning. President Xi Jinping signed a presidential decree to promulgate it, which will enter into force as of the date of promulgation.

After the passage of Hong Kong's national security law, 27 countries, including France, Britain and Germany, issued a joint statement at the United Nations Human Rights Council, saying that the Hong Kong national security law threatened Hong Kong's freedom, and called on Beijing to reconsider the Hong Kong national security law, Agence France-Presse reported. Most of the 27 countries are member states of the European Union, including France and Germany, as well as Australia, Canada, Japan, New Zealand and Switzerland.

British Prime Minister Johnson said on Tuesday that he would read the contents of the Hong Kong National Security Law very carefully to see if there was any conflict with the Sino-British Joint Declaration before deciding on the next step.

On the US side, Pelosi, speaker of the US House of Representatives, has called for sanctions and other actions against China. She believes that all available tools, including visa restrictions and economic sanctions, must be considered in response to China's passage of the Hong Kong National Security Law.

The White House National Security Council said that this was in violation of the Sino-British Joint Declaration. Beijing now regards Hong Kong as "one country, one system", and the United States must do the same. The United States will continue to take drastic action against those who strangle sha Hong Kong's freedom and autonomy.

The Federal Communications Commission (FCC) on Tuesday listed Chinese telecom companies Huawei and ZTE as a national security threat, banning US companies from using $8.3 billion of government funds to buy equipment from the two companies.

Last year, the agency unanimously voted to ban telecom manufacturers it considered threatening from accepting funds aimed at expanding Internet access in underserved areas, including rural America. Tuesday's announcement is the last step in preventing Huawei and ZTE from getting the money.

The Trump administration has been putting pressure on Chinese companies on security. U. S. officials have urged countries around the world not to use Huawei's network equipment in the next generation, or 5G, wireless network.

On Monday, June 29, local time, the official website of the US Department of Commerce said in a statement that the special related treatment for Hong Kong had been abolished, including the suspension of export license exemption, and that differential treatment assessment was under way.

Hong Kong's autonomy has been undermined by the increased risk that sensitive US technology will be transferred to the people's Liberation Army or the Ministry of State Security as the Chinese Communist Party implements new security measures on Hong Kong, according to the statement. The United States refused to accept these risks and revoked Hong Kong's special status as a result.

The US Department of Commerce has suspended regulations on preferential treatment for Hong Kong, including export license exemptions, the statement said. Further actions to eliminate differential treatment are also being evaluated.

Last month, US President Donald Trump responded to China's plan to enact a security law, saying he would start a process to abolish Hong Kong's special economic treatment.

The Hong Kong Act passed by the United States on October 15, 2019 requires the Secretary of State to submit an annual report to Congress to assess whether Hong Kong is autonomous enough to decide whether it will continue to enjoy special treatment different from that of mainland China under the 1992 United States Hong Kong Policy Act. On May 28 this year, US Secretary of State Pompeo submitted a report to Congress, saying that Hong Kong does not have enough autonomy.

"I am instructing the executive branch to begin the process of abolishing the policy exemption for Hong Kong's differential and special treatment," US President Donald Trump said at a White House news conference on May 29. "

The latest developments of the epidemic in the United States: a total of more than 2.72 million confirmed cases and more than 130000 deaths

According to the latest statistics, the cumulative number of confirmed cases of new crown pneumonia in the world has exceeded 10.58 million. At present, the cumulative number of confirmed cases in 12 countries in the world has exceeded 200000. In addition to the United States, there are also Brazil, Russia, India, the United Kingdom, Spain, Peru, Chile, Italy, Iran, Mexico and Pakistan. The cumulative number of confirmed cases in the United States has exceeded 2.72 million.

The global epidemic of new crown pneumonia continues to develop, and the epidemic is still spreading rapidly in the Americas, South Asia, the Middle East and other regions. The number of new confirmed cases in a single day remains high in the world, with more than 150000 cases recently.

Worldometers world real-time statistics show that there are more than 10.58 million confirmed cases of new crown pneumonia worldwide. The cumulative number of confirmed cases of new crown pneumonia in the United States is the largest in the world, with more than 2.72 million cases and more than 130000 deaths.

The number of new confirmed cases in the United States has exceeded 40,000 for five consecutive days. Statistics from the White House New Crown epidemic Task Force show that the rate of spread of the virus is increasing, especially in densely populated areas of the southern states.

The Trump campaign has cancelled plans to hold an event in Alabama next weekend because of fears of a rebound in the new crown pneumonia epidemic in the United States, CNN reported on Tuesday. On June 30, local time, in view of the rising number of people who tested positive for the new crown virus, Alabama Governor Kai Ivy announced that the state would extend the "safer at home" enforcement order until July 31.

On June 30, local time, Fauci, director of the National Institute of Allergy and Infectious Diseases and a top infectious disease expert, said when asked how many deaths and infections there would be in the United States before the end of the epidemic, that he could not make an accurate prediction, but it would be "very disturbing." Fauci said at a Senate hearing on the same day that there are now more than 40, 000 confirmed cases a day in the United States, and that if the current trend cannot be reversed, he "will not be surprised" if the number of new confirmed cases reaches 100000 a day in the future.

Robert Redfield, (CDC) of the US Centers for Disease Control and Prevention, said at a Senate hearing on June 30th that the daily number of new crown confirmed cases in the United States is increasing, and that it is imperative for Americans to popularize the use of face masks. He particularly urged young people to follow these guidelines.

Redfield said on June 25 that only 10% of the population in the United States may have been diagnosed with the new crown virus. According to Redfield's estimates, more than 23 million people may actually be infected with Crown pneumonia in the United States. Redfield estimates that 5% to 8% of Americans may have been infected with the new crown virus, indicating that more than 90% of the population in the United States may be infected for the first time.

The minutes of the Federal Reserve and the attack of "small non-farmers"

The US ADP employment data for June will be released at 20: 15 on Wednesday, and the market now expects the number of ADP jobs to increase by 2.85 million in June.

The move comes after US ADP employment fell by 2.76 million in May, far better than the expected drop of 9 million.

(: ADP), the source of changes in ADP employment in the United States

The data, known as "small non-farmers", has attracted the attention of investors. If the ADP employment data is strong, it may make market participants hope that the non-farm payrolls report will also perform well.

Some analysts pointed out that the strong employment data may make investors believe that the economy will show a V-shaped recovery, which will lead to a weaker dollar.

It is worth noting that as Friday (July 3) is the day of US Independence Day, the US market is closed ahead of schedule, so the June non-farm report will be released one day earlier. The U.S. non-farm payrolls report for June is due at 20:30 on Thursday.

The market currently expects non-farmers to increase by 3 million in June, on top of the 2.5 million increase in May, with the unemployment rate expected to fall slightly to 12.5 per cent and the average hourly wage down 0.5 per cent from the previous month.

Kevin Cummins, chief US economist at Natwest Markets, commented that if non-farm gains were indeed stronger in June, it would suggest an acceleration in labor market improvement, which would be another testament to the optimistic performance of retail sales and consumer confidence indicators in May.

In addition to the employment data, investors also need to pay attention to the US ISM manufacturing purchasing managers' index (PMI) data. The figures are scheduled to be released at 22:00 on Wednesday.

Media surveys show that the US ISM manufacturing purchasing managers' index was 49.7 in June, a sharp rebound from 43.1 last month.

The Federal Reserve will release the minutes of its June meeting at 02: 00 on Thursday. Investors can pay attention to more details in the minutes about the bitmap showing the Fed or keeping current interest rates close to zero until at least the end of 2022.

The Fed left interest rates unchanged at its June meeting, promising to keep the pace of asset purchases at least the current level, and expected the benchmark interest rate to remain close to zero until the end of 2022.

At a post-Fed press conference, Federal Reserve Chairman Colin Powell said the Fed was "firmly committed" to using all its tools and "doing everything we can" to limit the lasting damage caused by the epidemic to the economy.

On June 30, local time, Federal Reserve Chairman Colin Powell attended a hearing of the House Financial Services Committee to express his views on the US economic recovery and other issues. Powell said that until the new coronal pneumonia epidemic is brought under control and people are confident of returning to normal activities, a full economic recovery will not be possible.

Powell said that the US government must introduce adequate policies to provide the necessary aid and support for economic recovery. At the same time, Powell stressed the importance of bringing the epidemic under control as the US economy rebounded from the worst recession in history.

Bart Melek, head of global strategy at TD Securities, said: "the minutes are likely to confirm the Fed's easing policy."

Adam Button, managing director of ForexLive, said: "the increased uncertainty about the virus will consolidate loose monetary policy. The minutes of the Fed's meeting in the coming week will emphasize that the Fed will take further action. "

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