mask The ECB and the EU Commission in Focus alongside China

27/ 05/ 2020

The ECB and the EU Commission in Focus alongside China

27th May 2020

Yesterday’s Market

  • US New Home Sales (MoM)(Apr) ; Dallas Fed Manufacturing Business Index(May); Consumer Confidence;Chicago Fed National Activity Index (Apr) 
  • EUR-Gfk Consumer Confidence Survey(Jun)

Yesterday’s Explained 

The Euro to Pound (GBP/EUR) exchange rate fell by 0.4% today, with the pairing currently trading around £0.88. The Euro (EUR) suffered today as risk-on markets meant that investors had flocked to riskier-assets. This follows the announcement that the US biotech firm, Novavax, had begun trials on human subjects for its experimental Covid-19 vaccination.

In Eurozone economic news, today’s release of Germany’s GfK consumer confidence survey for June, which improved slightly from -23.1 to -18.9, left many single currency traders feeling gloomy. With the Eurozone’s largest economy continuing to struggle, the outlook for the bloc looks increasingly bleak.

The U.S. dollar bounced in early European trade Tuesday amid rising risk aversion given the mounting tensions between China and the U.S. over the new security law for Hong Kong.  Protests occurred in Hong Kong Wednesday as the national security law - which critics have called a direct attempt to curtail the city's unique freedoms - underwent a second reading in the city’s Legislative Council.U.S. President Donald Trump has promised a U.S. reaction to the law by the end of the week. Meanwhile, China retaliated by threatening countermeasures against any U.S. action, including sanctions.

 

Today’s Market

  • EUR ECB's President Lagarde speech Euro GDP Report
  • USD Richmond Fed Manufacturing Index(May)

Today’s Focus

The European Central Bank's President Christine Lagarde holds press conferences in detailing how the ECB observes the current and future state of the European economy. Her comments may positively or negatively the euro's trend in the short-term. Usually, a hawkish outlook is boosts the euro (bullish), while a dovish one weighs on the common currency(bearish).

The survey including information on shipments, new orders, order backlogs, and inventories conducted by Federal Reserve Bank of Richmond provides information on current activity in the manufacturing sector (mailing 220 business organizations). The industry inflation can been seen from the survey. Generally speaking, a high reading appreciates (or is bullish for) the USD, whereas a low reading is seen as negative (or bearish for) the USD.