Sentiment is weak this morning as markets focus on growing Covid-19 infection rates. US share index futures dropped at this morning’s open, and growth-exposed currencies are under pressure. Gold is moving higher, and looks set to test the seven-year highs at US$1,765. Bonds are well supported. Traders may take a cautious approach today ahead of important global data this week.

A lift in infection rates in southern US states adds to concerns generated by last weeks’ outbreak in Beijing, and an ongoing crisis in Brazil. In Australian the Victorian state government postponed its next wave of lockdown easing after a sharp increase in infections over the weekend. The potential economic damage of a new round of Covid-19 countermeasures will likely contain any investor enthusiasm.

This week brings PMIs from around the globe. The readings for June are an important window on economic activity, and a test of the v-shaped recovery theory. A very full market calendar will also see US GDP and inflation data, German and New Zealand consumer confidence and Singaporean inflation. Neither the People’s Bank of China nor the Reserve Bank of New Zealand are expected to change monetary settings at their meetings this week.

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