The EUR and GBP Managed to Strengthen Their Position Paired with the USD (Weekly Review)

Last week multiple releases of Eurozone and US statistics triggered no sharp fluctuations in exchange rates. One of the main factors that could affect currencies, and in particular the EUR, was the news of the intention of France and Germany to create a fund to save the European economy, which could suffer from the spread of coronavirus. In addition, the EUR closed the week with steady growth against the USd, but the uncertainty surrounding the implementation of the Franco-German initiative may limit the growth potential of the single currency.

The GBP dynamics was multidirectional, but paired with the USD, it mainly showed a positive attitude, and as a result it tested the level of 1.2423. Nevertheless, fundamental factors, including the lack of positive news on UK trade negotiations with the EU and the high probability of the Bank of England introducing negative interest rates, are unlikely to justify a larger growth of the British currency.

Towards the end of the week, market participants focused on a press conference by US President Donald Trump, convened in response to China’s adoption of Hong Kong’s national security law. Fearing the United States would refuse a trade deal with the PRC, investors bought up gold and, although at a more moderate pace, the JPY, but Trump’s speech was not as aggressive as the market participants feared. Thus, Gold and the JPY may be under pressure from sellers, but along with the continuing threat of an aggravation of US relations with China, their decline is unlikely to be large-scale.

Schedule for this week:

Monday, June 1
13:30 GMT - Canada. Manufacturing Purchasing Managers Index (PMI);
14:00 GMT - USA. ISM Manufacturing Employment;
14:00 GMT - USA. ISM Manufacturing Purchasing Managers Index (PMI).

Tuesday, June 2
04:30 GMT - Australia. Reserve Bank of Australia (RBA) Interest Rate Decision;
04:30 GMT - Australia. Reserve Bank of Australia (RBA) Rate Statement;
12:55 GMT - USA. Redbook Index.

Wednesday, June 3
22:30 GMT - Australia. AiG Construction Index;
01:30 GMT - Australia. GDP;
05:45 GMT - Switzerland. GDP;
07:55 GMT - Germany. Unemployment Rate;
07:55 GMT - Germany. Unemployment Change;
09:00 GMT - Eurozone. Unemployment Rate;
12:15 GMT - USA. ADP Nonfarm Employment Change;
14:00 GMT – Canada. Bank of Canada (BOC) Interest Rate Decision;
14:00 GMT - Canada. Bank of Canada (BOC) Rate Statement;
14:00 GMT - USA. ISM Services Purchasing Managers Index (PMI).

Thursday, June 4
01:30 GMT - Australia. Trade Balance;
11:45 GMT - Eurozone. European Central Bank (ECB) Interest Rate Decision;
12:30 GMT - Eurozone. European Central Bank (ECB) Press Conference and Monetary Policy Statement;
12:30 GMT - USA. Initial Jobless Claims;
12:30 GMT - USA. Trade Balance.

Friday, June 5
06:00 GMT - Germany. Factory Orders;
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;
15:00 GMT - Canada. Ivey Purchasing Managers Index (PMI).

Author: Anthony Porter, IAFT Analyst