Currency markets experienced a rare calm overnight with most currency pairs remaining in narrow ranges.
The safe-haven Japanese yen advanced across the board early as coronavirus fears spooked investors. However, risk sentiment has picked up steam again with most European and Asian indexes modestly higher.
While a number of emerging market countries are experiencing high Covid-cases, the U.S. remains the worry of most global investors. The U.S. registered the most new cases again yesterday according to Johns Hopkins, led by surges in Florida. Arizona and California. Texas received the most alarming headlines causing the government to pause its reopening plans.
This mornings data in includes personal income and spending at 8:30 a.m. At the same time, the PCE Deflator (the Fed’s preferred gauge for inflation) will register 0.0% price pressures on a month over month basis in May. Later, the University of Michigan consumer sentiment is expected to show some improvement in June.
What to Watch Today…
- Personal income and spending at 8:30 a.m.
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The Mexican peso is under renewed pressure this morning after data confirmed the Mexican economy contracted the most on record due to widespread shutdowns. The IGAE indicator, a proxy for GDP, fell 19.9% in April from a year earlier. The print is almost double the previous record drop of 11% during the financial crisis.
Mexico has been one of the countries hardest hit by COVID, most notably the deterioration of trade with the United States and the historic fall in the price of oil.
The British pound is slightly lower this morning and has experienced a rather boring week of trading. GBP/USD is set for a modest weekly gain of 0.4% versus its American counterpart. Trade negotiations between the U.K. and the E.U. continue to disappoint but have not really moved markets because of the already low expectations that have been entrenched during the four years since the Brexit vote.