RedFX: Plenty ahead as USD weakens
GBP: After a strong performance on Friday, GBP is holding ground recently lost vs USD (GBP/USD at 1.2400) and EUR (GBP/EUR at 1.1150). With Pentecost meaning FX markets are likely to be subdued today, things will liven up, as EUR-UK Brexit talks continue tater this week.
The ‘talk’ of negative interest rates in the UK continued last week, with MPC member Saunders suggesting that more interest rates cuts are on the way.
USD: A dire performance from the greenback over the last few sessions has seen EUR/USD break through 1.1100. The US labour market saw another 2million people file for unemployment benefits last month. As the total hits 40 million, the staggering fact that this represents one-quarter of the US labour force is hurting the USD. Alongside dreadful data ( -5% quarterly fall in GDP) and civil unrest, a fall seemed inevitable.
EUR: Higher, gaining 2% against major pairs, as news of a 750 billion recovery fund was confirmed, and the European data shows cases of Covid-19 falling quickly, in a seemingly controlled manner. The funds is designed to create loan packages to the worst-hit economies across Europe, and shows a commitment to a long-term, sustainable recovery.
AUD: With further easing of lockdown restrictions, Australia is accelerating infrastructure spending to help the economic recovery(AUD 5.25bio allocated to extend trainlines to the new airport near Sydney), alongside an extension of the AUD 250bio stimulus package already promised.
Data released from China this morning showed decent manufacturing sector activity and 2 PMI readings that beat expectations, boosting AUD and NZD (USD/NZD at 0.6262 – a 12wk high). After last week’s concerns regarding new US-China trade wars, the fact that China seems to be pulling itself out of trouble will pull AUD and NZD with it.
CAD: With USD/CAD falling through 1.3750, CAD is benefitting from a slightly more optimistic global trade backdrop, and the recovery in oil, however, it has a long way to go before the market is convinced of fundamental CAD strength.
Amid a reduction in Covid-19 cases, The Democratic Republic of Congo has reported a new Ebola case in a region far from the previous outbreak – this devastatingly sad news is a stark reminder of the new world reality.
Economic Events ahead:
GBP: The market will be poised for any Brexit headlines
USD:
Wednesday 3rd June: Employment data
Thursday 4th June: Initial jobless claims data
Friday 5th June: Monthly Employment data
EUR:
Wednesday 3rd June: German unemployment data & EUROZONE unemployment rate
Thursday 4th June: Interest Rate decision & Press Conference
AUD:
Tuesday 2nd June: Interest Rate decision & statement
Wednesday 3rd June: GDP data and key speech from Central Bank member Bullock
CAD: Friday 5th June: Unemployment rate