The US dollar gained against all its major counterparts yesterday despite another 2,440,000 people losing their jobs in the US in the previous week. Participants scrambled to buy the greenback yesterday in what was the currency’s best performance of the week so far. Global stock markets retreated as investors sought the safety of government bonds.
GBPUSD rose towards the $1.23 handle yesterday following much more respectable UK manufacturing and services flash May PMIs. Both numbers beat expectations and spark hope that a robust recovery may well be on its way. However, these gains were not maintained. A round of US dollar buying kicked in as the New York session got underway. Both the pound and euro took a hit, surrendering their daily gains and racking up losses on the day.
The next big test for sterling arrives this morning with the latest set of retail sales data reflecting April activity. Heavy declines are forecast with March’s 5% drop being tripled to an expected 15% fall. This comes just as reality is beginning to sink in over the lack of progress made in Brexit negotiations. To add to this, relations between the UK and EU negotiations teams are becoming increasingly frosty with it now very clear how far apart both teams are in terms of what they would like to achieve.
Elsewhere, meeting minutes will be released from the European Central Bank’s last announcement back in April. These are scheduled to cross the news wires at lunchtime where we’ll also see the latest retail sales report from Canada.
Have a great long weekend.
Written by Viv Savani. 8:51am, May 22nd 2020
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