The U.S. Dollar is once more being pulled in two directions by different sets of narratives for majors and those emerging and commodity-based currencies.
Overview
Against Euro, Pound and Yen, the buck is up on lack of momentum in these regions that have seen more worrisome numbers in the pandemic and are struggling to come up with good re-opening strategies. Meanwhile, all other assets are being relieved by good news out of China when it comes to its export data, which increased by 3.5% in April, higher than anyone expected. The Australian Dollar was a sure winner from the report and WTI oil prices jumped by almost 10.0%.
On the other hand, export figures went down by 14.0% and the tension between China and the U.S. could grow stronger as a result. President Donald Trump believes Beijing is not holding up its promises to increase purchases and import more, thus he is pondering if we should void “Phase One” of the trade agreement. An additional 3.2 million people applied for Initial Jobless Claims, which solidifies the worries over re-starting the company while figuring out how to best maintain all safe. We shall see if the return to risk is ample enough to affect the buck as there are also reports that U.S. authorities want to further loosen previous business restrictions when dealing with Huawei.
What to Watch Today…
- WEBINAR | Cocktails & Currencies @ 4pm EST
Complete Economic Calendar can be found here.
>> SUBMIT AN FX QUESTION for our Traders before Happy Half Hour
EUR
The Euro remains under pressure following days of negative data piled on top of concerns over the nature of monetary policy cooperation moving forward. The highest German court’s decision to have the European Central Bank review its ways. The response from the ECB was one of reminding Germans that the continent’s path to recovery after 2008 was definitely forged by the efforts and measures exercised in accordance to EU parameters. We shall see if world leaders can find some cohesion and improve the spat between the two entities, key to growth stability. Later this morning, IMF director Kristalina Georgieva and former IMF head and ECB President Christine Lagarde will join a discussion about what it will take to reopen the economy.
GBP
Sterling dwindled a bit following the Bank of England’s meeting and cold reality check. While there were no changes to policy, in the announcement Monetary Policy Committee officials explained that current sovereign bond purchasing program is set to expire in July, which means that the central bank might consider increasing QE after since under the schedule the limit is set for the summer.
Additionally, the members highlighted the need to reopen the economy carefully and how their outlooks on inflation and GDP will be based on rapid changes. Nevertheless, they believe the economy can shrink by 14.0% this year and mount a comeback of 15.0% the next.
