Sterling was soft early on as GBP/EUR sellers appeared. There was news that Chancellor Sunak was extending the furlough system through to October, and this helped the pound regain ground against the US dollar, until later in the day. Today, we have seen preliminary GDP drop 2% on a quarterly basis rather than the expected 2.6%, and industrial production only declined 4.2% on a monthly basis rather than the 5.5% expected. PM Johnson speaks later in parliament today.
The single currency was supported against the US dollar on technical trading. EU Commission President, Ursula Vin Der Leyen, speaks this afternoon on the EU plans to negotiate a way out of the pandemic. Not such good news is that the virus infection rate has jumped up 300% in Germany after the lockdown was eased.
The President said he was not interested in new Chinese trade talks. There was also a move by State pensions not to invest in Chinese stocks anymore. The Fed had its first day of buying corporate debt exchange traded funds which has been seen as support for US equities. All of this against a historical fall in us CPI. It fell by 0.8% from April but seemingly was again ignored by the markets. President Trump also backed the opening of the Tesla factory in California. However, it has been reported that after last month's instruction to open meat packing factories there has been a 40% increase in Covid-19 cases in the areas where the meat packing plants are situated. Fed's Mester said negative interest rates would not work well in the US.
As the dollar eased, so the commodity currencies gained a touch. Until the Reserve Bank of New Zealand announced that, it was pretty much doubling its QE programme. This encouraged US dollar buyers.