Return to daily updates Thursday May 21st 2020

UK inflation data enhance chance of negative rates

Headlines

  • UK inflation data enhance chance of negative rates
  • Euro marches on as sentiment improves
  • Dollar firms up, eyes Sino-US relations

GBP

  • UK inflation data was cause for concern as it fell its lowest in four years to below 1%. As such, speculation increased that the Bank of England could cut interest rates to below zero to bolster the economy and get people spending. The pound fell after the data to a low versus the Euro and Dollar, as well as a basket of currencies. BoE governor Andrew Bailey, stated he would like to see how the current cuts effect the economies performance for now, and also how other countries with negative rates perform. Currently GBPUSD sits around the 1.22 mark.

EUR

  • The euro continues to perform well after survey data out of the eurozone showed German investor sentiment increased more than expected in May. This combined with the proposed France-Germany recovery fund was enough to push EURUSD to its highest levels in two weeks. a high of just sub 1.10 was hit before falling slightly.

USD

  • The dollar firmed up this morning as once more, investors were concerned about global economic recovery as well as the China-US relationship issues. Currently, diplomatic relations between the pair are strained, with Trump attacking China on the handling of the coronavirus outbreak. As such, the dollar rose 0.2% against the Euro as well as the yuan. 

Other currency news

  • Risk sensitive AUD fell overnight due to current market conditions and imposed Chinese tariffs on exports. The yen was steady versus the dollar trading around 107.60 and the NZD general performed well yesterday although fell overnight to give back half the gains.

Amir Mehrad
Market update by Amir Mehrad
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