Stocks Recover Further, the EUR and GBP Remain Vulnerable (Weekly Review)

The weakening of quarantine measures related to the spread of coronavirus in Europe, the USA, China and other countries contributed to further easing tensions in the financial markets. Stock indices showed predominantly positive dynamics, which negatively affected the dynamics of the JPY, although its decline against the USD was limited, and the chances of resuming growth still remain, since tensions between the US and China could trigger a fresh wave of sales in the stock markets.

Another market driver last week was the joint plan of Germany and France to create a fund aimed at restoring the European economy after strict quarantine measures. This news triggered the elimination of short positions in the EUR, and as a result it rose against the USD in the area of ​​psychological level 1.1000. Nevertheless, the continuing uncertainty regarding the plan returned the sellers to the market, and the EUR/USD closed the week within the 9th figure, and the risks of a decline in the direction of 1.0800 still remain.

The GBP is still vulnerable due to continued disagreements around the trade deal between the UK and the European Union. Thus, the growth of the GBP/USD was limited by the resistance of 1.2285, and after testing it the pair returned to support 1.2165. In the absence of progress in trade negotiations, the position of the British currency will remain vulnerable, and its attempts to grow further can be used to build up short positions.

Schedule for this week:

Monday, May 25
17:30 GMT - Canada. Bank of Canada Governor Poloz Speaks.

Tuesday, May 26
22:45 GMT – New Zealand. Trade Balance;
22:45 GMT - New Zealand. Import/Export;
06:00 GMT - Germany. Gfk Consumer Climate;
13:00 GMT - USA. House Price Index;
14:00 GMT - USA. Consumer Confidence.

Wednesday, May 27
21:00 GMT - Canada. Bank of Canada Governor Poloz Speaks;
07:30 GMT - Eurozone. European Central Bank President Lagarde Speaks;
14:00 GMT - USA. Richmond Manufacturing Index;
18:00 GMT - USA. Beige Book.

Thursday, May 28
12:00 GMT - Germany. Harmonised Index of Consumer Prices (HICP);
12:30 GMT - USA. Durable Goods Orders;
12:30 GMT - USA. Initial Jobless Claims;
14:00 GMT - USA. Pending Home Sales.

Friday, May 29
23:50 GMT - Japan. Industrial Production;
23:50 GMT - Japan. Retail Sales;
09:00 GMT - Eurozone. Consumer Price Index (CPI);
09:00 GMT - Eurozone. Core Consumer Price Index (CPI);
12:30 GMT - Canada. GDP;
12:30 GMT - USA. Core PCE Price Index;
12:30 GMT - USA. Personal Income/Spending.

Author: Anthony Porter, IAFT Analyst