As the month of May commences, the US dollar appears to be losing its footing. Yesterday the buck fell as the European Central Bank offered further support to the eurozone, in what was a heartfelt press conference from Madame Lagarde. The pound breached the much elusive $1.25 handle while the euro raced towards $1.10.
The ECB press conference saw the usual array of questioning relating to economics and monetary policy put forward to President Lagarde. Much of the same rhetoric was discussed with the main takeaway simply being the fact that the central bank will do all it can to ensure the various eurozone regions are well supported and can be preserved throughout this crisis.
Economic numbers were not pretty yesterday with eurozone Q1 GDP surprising to the downside at -3.8%. Madame Lagarde confirmed the worst is still to come with respect to data, divulging that the central bank’s worst-case scenario for Q2 is -15%. Things were just as ugly across the pond in the US. Weekly initial jobless claims hit 3.8-million which takes the total amount above 30-million in the last 6-weeks!
The majority of Europe is off today celebrating Labour Day. FX flows will not be as significant as usual, therefore, we may encounter enhanced volatility. Across the trading session, with it being the first of the month, the focus will be on manufacturing data with the UK, and US releases the highlight.
Have an enjoyable weekend and please stay safe.
Written by Viv Savani. 8:41am, May 1st 2020
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