Daily Market Update

Buck Down as Globe Re-Opens, China Tensions

May 26, 2020

The U.S. Dollar’s performance is tied to countering the safe-haven rally that took place on Friday as a variety of news items pointed at too much havoc in markets to be optimistic about global growth.

Overview

Nevertheless, the narrative is now hurting the buck as tensions between China are perceived as affecting American dealings the most Additionally, with regions partially re-opened, there have been new cases of COVID-19, only increasing doubt about the word’s ability to prevent further damage from the virus. However, there is mounting pressure economically to just let the economy flow with coronavirus an accompanying risk. Japan is the latest major nation to declare its state of emergency over with, thus FX flows may be less dollar-friendly.

This week we will be eagerly waiting for data that breaks down Q1 on Thursday and any headlines that clarify plans to normalize parts of the U.S. that are still under restrictions. Also, we will see if airline activity promotes further increases in the prices of oil that have helped lift CAD and MXN lately. Also, Hong Kong is arguing with Beijing authorities over its independence and protests could hurt other Chinese initiatives.

 

What to Watch Today…

  • No major events scheduled for today

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EUR

The Euro is up once more based on positive thinking behind the European Union’s plans to cooperate with one another. The Pandemic Emergency Purchase Program has been touted as a masterpiece from EU lawmakers and we will see this week details behind the implementation of the Franco-German Recovery funds. Overall, the bloc looks more confident than at any time throughout this pandemic crisis and the shared currency is establishing some ranges after the focus heads towards economic return.

 

GBP

All non-essential businesses will be able to re-open in the U.K. on June 15th, as Prime Minister Boris Johnson announced over the weekend a set plan for normalcy. We will have to keep an eye on Brexit developments this week as now that we enter the second half of the year there will be more pressure to delay the whole agreements and exit. We do not have much faith in Sterling at the moment, but the currency may enjoy a break the next few days as anxiety over Brexit is overshadowed by getting people back to work.

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