Aggravation of US-PRC Relations May Trigger a New Phase of Trade War (Weekly Review)

There were no significant changes in the foreign exchange market over the past week. Fears associated with the spread of coronavirus have receded into the background, and volatility again leaves much to be desired. Nevertheless, the EUR was able to win back some of the losses incurred earlier paired with the USD, and the GBP continued to grow. Nevertheless, there are no objective reasons, except for profit taking by speculators at the end of the month, for growth, therefore neither the EUR nor the GBP managed to gain a foothold above the important broken levels.

The AUD also stopped growing against the USD, and the reason for this was another aggravation between the United States and China. Donald Trump has blamed the spread of coronavirus and related losses on China and threatens to seek appropriate compensation. One option is to increase tariffs on Chinese goods, which will mean the development of a new phase of the trade war.

Along with it, stock indices, which showed positive dynamics, again underwent a sale. If their fall resumes, the JPY, as it usually happens, may be in demand, but a significant fall of the USD against the JPY can hardly be expected. As for the AUD, the dynamics may worsen and the decline may resume, since China is the largest trading partner.

Schedule for this week:

Monday, May 04
07:55 GMT - Germany. Markit Manufacturing Purchasing Managers Index (PMI);
14:00 GMT - USA. Factory Orders.

Tuesday, May 05 
22:30 GMT - Australia. AiG Construction Index;
04:30 GMT - Australia. Reserve Bank of Australia (RBA) Interest Rate Decision;
04:30 GMT - Australia. Reserve Bank of Australia (RBA) Rate Statement;
08:30 GMT – United Kingdom. Markit Services Purchasing Managers Index (PMI);
12:30 GMT - USA. Trade Balance;
14:00 GMT - USA. ISM Services Purchasing Managers Index (PMI).

Wednesday, May 06 
22:45 GMT – New Zealand. Unemployment Rate;
22:45 GMT - New Zealand. Employment Change;
01:30 GMT - Australia. Retail Sales;
06:00 GMT - Germany. Factory Orders;
09:00 GMT - Eurozone. Retail Sales;
12:15 GMT - USA. ADP Nonfarm Employment Change.

Thursday, May 07 
01:30 GMT - Australia. Trade Balance;
01:30 GMT - Australia. Import/Export;
02:00 GMT - PRC. Trade Balance;
02:00 GMT - PRC. Import/Export;
06:00 GMT – United Kingdom. Bank of England (BOE) Interest Rate Decision;
06:00 GMT - United Kingdom. Bank of England (BOE) Meeting Minutes;
06:00 GMT - Germany. Industrial Production;
12:30 GMT - USA. Initial Jobless Claims;
15:00 GMT - Canada. Ivey Purchasing Managers Index (PMI).

Friday, May 08
06:00 GMT - Germany. Trade Balance;
12:30 GMT - Canada. Unemployment Rate;
12:30 GMT - Canada. Employment Change;
12:30 GMT - USA. Unemployment Rate;
12:30 GMT - USA. Nonfarm Payrolls;
12:30 GMT - USA. Average Hourly Earnings;
12:30 GMT - USA. Participation Rate.

Author: Anthony Porter, IAFT Analyst