This year began with a quarantine in China and had already reached America by March. As a consequence, the main blow in the western hemisphere was struck in the second quarter. Thus, Canada noted a record decline in GDP of 38.7% on an annualized basis. Although economists have already noted a fairly rapid recovery, since the catastrophic data for the second quarter was caused not by economic factors, but by total quarantine. Therefore, this release did not provoke a collapse in stock indices or the Canadian dollar.
Now let's move on to the rapidly strengthening risky currencies paired with the USD. Let me remind you that at the end of last week it became known that the Fed will not tightly regulate inflation, keeping it from moving above the target level of 2%. This is a fairly strong bearish fundamental factor for the American currency, but it is noteworthy that a significant strengthening of the EUR / USD currency pair did not follow.
The AUD / USD and NZD / USD currency pairs renewed their highs. Moreover, the AUD / USD pair has renewed highs since the end of 2018. All this indicates an increase in interest in risky currencies, which are AUD and NZD. However, today we are seeing a moderate weakening of these currency pairs, which is due to the low saturation of the news background. As a consequence, the current weakening is a technical correction.
The situation is similar with the GBP / USD currency pair, whose quotes have reached highs since the end of 2019. But the absence of additional growth drivers contributes to the development of a correctional decline. As a result, there is a risk of the pair returning to the area of 1.3225-1.3250. A breakout of this area will significantly increase the risk of a more powerful wave of decline in the medium term.
I will conclude today's review with the US stock market, which continues to update its all-time highs. The key index S & P 500 is already trading above 3500, adding 3.3% last week. The key bullish fundamental factor remains the super-soft monetary policy of the US Federal Reserve, as well as the willingness of the regulator to measure inflation above the target level of 2%.