The turnover of foreign exchange futures on the Singapore Exchange in July reached US $96 billion so far this year, the cumulative turnover has increased by 18% compared with the same period last year.

With falling volatility in the foreign exchange market and rising sentiment in the stock market, the cumulative turnover of foreign exchange futures on the Singapore Exchange in July reached 1.67 million contracts, with a nominal value of US $96 billion.

Since the beginning of this year, the cumulative turnover has reached 858 billion US dollars, an increase of 18.0% over the same period last year.

The trend of financial markets is still out of touch with the economic recovery, and the next round of economic stimulus policies of the United States and the European Union have attracted a lot of attention.

Global stock markets continued to rise strongly in July, with the S & P 500 rising for the fourth month in a row, but there are new signs that the economic recovery has stalled. In the United States, GDP contracted at an annual rate of 32.4% in the second quarter, with the service industry as the main reason for the sharp contraction. With novel coronavirus still spreading on a large scale, some states in the United States have postponed plans to restart the economy, sparking concerns about a new round of economic pains. Despite the good news from technology stocks, the market is still worried that financial markets are not reflecting the real state of the economy.

The Federal Reserve announced at its FOMC policy meeting in July that interest rates would remain near zero and would use all tools to support the economy's recovery from what Federal Reserve Chairman Jerome Powell called the worst recession in our lifetime. Fitch, the rating agency, adjusted its outlook for US debt from stable to negative, citing "deteriorating US public finances and the lack of a credible fiscal consolidation plan".

The continuing tension between China and the United States remains an important factor in global risk sentiment.

Sentiment in investing in the stock market heats up and volatility in the foreign exchange market decreases

After the US decided to close its consulate in Houston this month, China responded by ordering the closure of the US consulate in Chengdu. These unprecedented actions have further increased the uncertainty in Sino-US relations.

With the intervention of global central banks, interest rates are close to zero, curbing market volatility and global foreign exchange trading activity. The amount of open foreign exchange futures contracts on the Singapore Stock Exchange rebounded slightly in July, up nearly 9% from the previous month to US $8.34 billion. The cumulative trading volume of foreign exchange futures on the Singapore Exchange fell 18 per cent in July from a year earlier to US $96 billion. A total of 1.67 million foreign exchange futures contracts were traded on the Singapore Stock Exchange in July, down 20 per cent from a year earlier.

In July, the turnover of US dollar / offshore RMB futures on the Singapore Exchange exceeded US $70 billion, and the turnover so far this year increased by 18.7% compared with the same period last year, exceeding US $601 billion.

After China's revised GDP fell 10 per cent in the first quarter, GDP rebounded by 11.5 per cent on a non-annualised quarter-on-quarter in the second quarter, far exceeding expectations and driving year-on-year growth to 3.2 per cent. But continuing tensions between China and the US and concerns about the potential of China's economic recovery continue to dampen sentiment. With the increase in the number of people infected with the second and third waves of novel coronavirus in many places in China, the economic outlook has become even more gloomy.

Official manufacturing PMI rose to 51.1 in July from 50.9 the previous month, according to data released by China's National Bureau of Statistics. With consumption still weak, the recovery is still largely dependent on government-led economic investment. The benchmark one-year lending rate remained unchanged at 3.85 per cent in July, but if the strong recovery does not continue, further cuts in policy rates and reserve requirements cannot be ruled out in the future.

At a recently concluded meeting of the Politburo of the Communist Party of China (CPC) Central Committee, China's top leadership body called for lower financing costs for the real economy. The April meeting also called for a reduction in lending rates.

Increasingly strained relations between China and the US have also dampened expectations of recovery, but the first phase of the trade agreement signed earlier this year does not appear to have been affected.

In July, the turnover of US dollar / offshore RMB futures on the Singapore Exchange fell 17.6 per cent from the previous month to more than US $70 billion (701585 lots), accounting for about 82 per cent of the global market. At the end of July, the outstanding contract volume of SGX dollar / offshore RMB futures increased by 10.5% month-on-month to US $7.16 billion (71642 contracts).

The turnover of Indian rupee / dollar futures on the Singapore Exchange has increased by 12.7% year-on-year so far this year, exceeding US $240 billion.

Due to the financial strain caused by the novel coronavirus epidemic crisis, India is likely to fail to meet budget expectations (economic growth, revenue and deficit targets), Bloomberg reported recently. The epidemic has slashed tax revenues, and the pressure on resources has intensified again after the government promised to take measures to support the economy. On the monetary policy front, the Reserve Bank of India has cut interest rates by 115 basis points this year and is not expected to continue to take measures on monetary easing.

Although India has gradually lifted the strict blockade measures, if the novel coronavirus epidemic infection reaches its peak in the next few months, it is still possible to adopt local blockade measures, and there is still some way to go for economic activity to return to normal.

The remaining glimmer of hope comes from an improvement in the balance of payments, mainly due to lower oil consumption and reduced imports. In June, India ran a trade surplus for the first time in 18 years, with exports falling 12.4 per cent year-on-year and imports shrinking by 47.5 per cent.

The Indian rupee appreciated in July, in line with the local currency's response to risk sentiment. However, implied volatility is still strongly curbed, with SGX Indian rupee / dollar futures trading volume of less than 1 million lots (down 28% from the previous month) and turnover of US $25 billion (down 27% from the previous month). At the end of the month, the amount of open contracts fell 14% from the previous month to 34272 hands.

South Korean won reverses weakness, but economic outlook remains bleak

South Korea's gross domestic product shrank the most in 22 years, marking the country's first technical recession since 2003. Real GDP fell 3.3 per cent quarter-on-quarter in the second quarter from April to June, following a 1.3 per cent quarter-on-quarter decline in GDP in the first quarter from January to March, according to the Bank of Korea. At the recently concluded policy meeting, the Bank of Korea maintained its monetary easing position on the grounds that domestic demand remained weak and inflation expectations would remain at current extremely low levels.

The South Korean won has performed poorly against other Asian currencies, reflecting the sluggish economic recovery despite the lowest monthly level of new cases of novel coronavirus infection. Preliminary trade data for July show that both export and import contraction trends are expanding, reaching-12.8% and-13.7%, respectively, compared with the same period last year.

In July, the trading volume of Korean won / US dollar futures on the Singapore Exchange was 13774 lots (down 60.2% from the previous month), with a turnover of US $287 million (down 59.9% from the previous month). The number of open contracts rose 5.16% month-on-month to $58.2 million (2768 contracts) at the end of the month.