- Sterling hits 20 day low versus euro
- Germany reports new cases
- Dollar lower as Trump talks up negative rates
- Sterling hit a 20 day low versus the euro as confusion reigned about government plans on relaxing lockdown measures as well as the coronavirus death rate rising once more, of which the UK is now the highest in Europe. Britain also announced an extension of its job retention scheme, in which the government pays 80% of furloughed workers’ wages, by another four months until the end of October. The announcement did little to move the pound, which is the worst-performing G10 currency so far this month, held down by concerns about the government’s handling of the crisis.
- Germany reported 798 new coronavirus cases and 101 new deaths after relaxing lockdown measures. The virus spread is below the key “r” rate of 1, and the rate of recovery is higher than the rate of new cases which is positive however there have been small clusters of the virus breaking out in certain small towns in Europe. The euro was trading generally higher versus the dollar and pound yesterday and markets will eye economic data today to dictate trading.
The dollar was lower this morning as markets considered Fed Chair Powell’s speech that there could be negative rates within the US. Trump pushed the Fed yesterday to adopt such a policy, hoping to push more money into the economy and bolster their recovery. Data showed on Tuesday U.S. consumer prices dropped 0.8% in April, the biggest since the Great Recession, raising the spectre of deflation as the economy sinks deeper into recession and fuelling the debate about policy responses.