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Global market watch - 29th May 2020

The US equity markets continue to gain ground as the country opens up, and the recent stimulus packages are very much in focus. Fed’s Williams said the central banks actions would not overheat the US economy. As if in confirmation, April pending home sales fell 21.8%, worse than the expected 17%. We have the trade balance for release today as well as Fed Chair Powell speaking later in the afternoon. President Trump has announced that he will hold a press conference on China today as well.

The pound weakened in morning trading, as BoE MPC member Saunders said the UK economy would not recover for 2 to 3 years. He added that while the Bank didn’t rule out negative rates, they didn’t rule them in either. Later, in US afternoon trading, with the US equity markets continuing to push higher, GBP/USD strengthened as well. GBP/EUR stayed in recent ranges until early trading today. No UK economic data today, but we do have month end fixings to move us.

EUR/USD pushed higher yesterday by some 0.8%, as the market continued to appreciate the EU stimulus package. German May preliminary CPI was as estimated at +0.6%, and as the market was ‘risk-on’ in nature, EUR/USD was again supported. We had first estimate EU CPI readings this morning and as expected saw a weak increase of 0.1% after last month’s 0.3% gain. After a week of Polish zloty strength, the Polish central bank surprisingly cut interest rates to 0.1% from 0.5%. Swiss KOF economic barometer was a shocking 53.2 and much lower than the 70.2 expected.

The commodity currencies stayed in recent ranges, supported by the risk-on theme. Canadian GDP will be released today and is expected to have declined by 9% in April.

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