Financial markets await Trump news conference on trade with China as dollar continues to give back Covid crisis gains

The initial surge the dollar enjoyed when the Covid crisis hit in March has slowly been given back as the dollar continues to lose ground to most major currencies. Today the financial markets are awaiting comments from President Trump regarding the US response to China’s imposition of authoritarian rule in Hong Kong. 

"Don't watch the clock; do what it does. Keep going."
Sam Levenson
  • FX Rates
    May 29, 2020

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  • USD

    The dollar continued its weakening trend this past week. Economic data came in at historic lows, but in many cases was not as bad as expected. This morning Personal Spending for April's reading was -13.6% which is the largest monthly fall since records began in 1956. The dollar has enjoyed safe haven buying since the outbreak of the Covid crisis in March, but has steadily given back those gains over the past couple months.

    GBP
    The British pound is flat versus the US dollar as UK/EU trade discussions are expected to begin next week. Market participants believe the talks will be very difficult and the year-end deadline may be extended. A prolonged negotiation on UK/EU trade would hurt both parties as uncertainty would weaken overall business activity.
    EUR

    The euro gained on overall dollar weakness. Inflation data for the eurozone showed price changes hovering close to zero. There is a clear bias for a stronger euro as hopes of a EUR 750B stimulus package provide optimism for euro bulls.  

    CAD

    The Canadian dollar set a fresh two-month high vs. the US dollar after Canadian Q1 GDP data (-8.2%) came in better than expected (-10%). The price of West Texas Intermediate remains near early March highs.

    ASIA/PACIFIC

    Stocks in Hong Kong led bourses lower in the region as political tensions dampened sentiment. Most FX market practitioners do not see the Hong Kong dollar breaking its peg to the US dollar anytime soon.

    The Japanese yen gained despite industrial output in Japan falling more than forecast for March, missing the consensus and recording the steepest drop since 2011.

    The Australian dollar continued its strengthening trend on overall US dollar weakness and an increase in iron ore prices.
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Peter Compton
WRITTEN BY
Peter Compton

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