Daily Update - 7th May 2020
USD-ADP Employment change Bank of Japan Monetary Policy Meeting Minutes The euro is heading for the worst week in a month after a surprise ruling by a German court hurt confidence in the European Central Bank’s ability to manage the region’s economic recovery. The pound slipped to nearly two-week lows against the greenback on Tuesday as construction activity fell to its lowest level ever as the nationwide lockdown brought activity to a halt.The purchasing managers' index for UK construction dropped to a reading of 8.2 in April, down from 39.3 the prior month, the lowest level since the survey began in 1997. as reports revealed the UK has drawn up a three-stage plan to ease the coronavirus restrictions. The BoE is set to leave its policy unchanged at an early morning rate decision. Expanding its bond-buying program could boost the pound The bank's new growth projections could be devastating, sending sterling down. The Monetary Policy Summary, released by BOE, contains the outcome of their vote on interest rates and other policy measures, along with commentary about the economic conditions that influenced their votes. Most importantly, it discusses the economic outlook and offers clues on the outcome of future votes.Yesterday's market
Yesterday's explained
The common currency has fallen 1.5% in three days, The EUR/USD pair fell for the third straight on Wednesday as the shared currency continues to have a difficult time finding demand amid the uncertainty surrounding the ECB's bond-buying programme. Reflecting the negative sentiment surrounding the euro area, the spread between 10-year Italian and German government bond yields hit the highest level in two weeks
The European Commission said on Wednesday that the currency’s future could be in danger if the economic recovery was handled badly.
Boris Johnson’s government must review the lockdown, although the Prime Minister has noted he is worried about triggering a second wave of the virus. First phase involves small shops reopening, as well as outdoor workplaces. The second phase will involve large shopping centers while more people will be encouraged to go back to work. Places such as pubs, restaurants and hotels will be the last places to open. Another three weeks of lockdown, or close to that, is likely to be confirmed by PM Johnson on Sunday, underlining again the fact that the UK is behind the rest of Europe in this crisis.Today's market
BoE Interest Rate Decision is announced by the Bank of England. If the BoE is hawkish about the inflationary outlook of the economy and raises the interest rates it is positive, or bullish, for the GBP. Likewise, if the BoE has a dovish view on the UK economy and keeps the ongoing interest rate,,or cuts the interest rate it is seen as negative, or bearish.
The Initial Jobless Claims released by the US Department of Labor is a measure of the number of people filing first-time claims for state unemployment insurance. In other words, it provides a measure of strength in the labor market. A larger than expected number indicates weakness in this market which influences the strength and direction of the US economy. Generally speaking, a decreasing number should be taken as positive or bullish for the USD.
