FX & market recap:
President Trump continues to poke China with a sharp stick. He railed at China for the COVID-19 outbreak, accusing them of deliberately hiding its severity, while labeling it the “China Virus.” Today, Trump said he would announce new measures aimed at China in response to Beijing’s move on Hong Kong autonomy.
Equity traders were cautious but not spooked. The major Asia indexes dipped modestly. The Nikkei 225 lost 0.18% but still closed out May with a 10.66% gain. European bourses are trading down, but Germany’s DAX is enroute to a 5.0% gain for May. S&P Futures are also a touch lower, but the S&P 500’s 3.07% MTD gain, looks safe.
Canadian dollar highlights:
USD/CAD opened in NY at 1.3954 then dropped to 1.3739 in early trading. Today’s March GDP report should not have any impact on the currency pair unless the result is sharply different from the -9.0% expected. Oil traders seem to be worried about rising US/China tensions. WTI oil dropped $34.26/barrel yesterday to $32.38/b in Europe, just before NY opened.
EUR/USD is trading at the top of its overnight 1.1071-1.1140 range, supported by a mix of risk aversion demand, bullish intraday technicals on the break of 1.1070, and the ongoing short-squeeze following the EU €825 billion COVID-19 Relief fund proposal. A rash of week Eurozone economic data releases today raised expectations that the ECB will announce another round of monetary stimulus next week.
British pound highlights:
GBP/USD recovered its small overnight loss in early NY trading and is now unchanged compared to the close. Once again, month-end flows, are supporting prices while EU/UK trade talk concerns limit gains.
Asia Pacific highlights:
AUD/USD and NZD/USD are tracking broad US dollar moves and also supported by month-end US dollar selling pressures.