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Currency Market Analysis

May 19, 2020 | Currency Market Analysis

Global Themes

Despite some profit-taking in equity markets today, the US dollar continues to weaken against most majors on the increase in overall investor sentiment. Monday’s 911-point/4% advance in the Dow resulted from the Moderna announcement of positive results from its phase one clinical trial of a Covid vaccine, as well as the pledge of further support for the economy, if needed, from Fed Chairman Powell on the weekend. Oil continues to advance today up $1.25 to $33, its highest level in over a month, as production cuts relieve pressure on storage.

GBP

The UK reported 865,000 unemployment claims in the month of April, which exceeded expectations of a 675,000 drop. The Pound continued its impressive recovery against the dollar for a second straight day after reaching an eight-week low, as investor sentiment improves. Preliminary Manufacturing and Service Sector Purchasing Managers’ Indexes are released for May Thursday.

EUR

The Euro continues to advance vs the dollar today as it broke out of its recent 1.5-cent range yesterday with a vengeance. The Euro has added 2-cents in not quite two trading sessions. Euro was further buoyed today by the news that Germany and France are working on a 500 Billion-Euro aid package. It still requires the agreement of all European Union member states to be adopted. The German ZEW Investor Sentiment Index current conditions fell to its lowest level since 2003 at -93.5 v -91.5. However, the Economic Expectations component rose from 28 in April to 51 in May, indicating investors are seeing a brighter future ahead. Preliminary Manufacturing and Service Sector Purchasing Managers’ Indexes are released for May Friday.

CAD

A 32% gain in oil prices, or $8 in just 4 trading sessions is providing support for the Canadian dollar. As is the overall improvement in investor sentiment. There are still major hurdles for the Canadian dollar this week including April Consumer Prices Wednesday, and Retail Sales for March reported on Friday. 


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