Forex Today: Slow start to a busy week
|What you need to know on Monday, May 1st:
The greenback closed the week with losses against most major rivals, hit by dismal US data and relief spurring demand for high-yielding assets triggered by US President Trump speech. Trump said that China broke its word to ensure the autonomy of Hong Kong. As a result, the US administration will begin the process to eliminate policy exemptions that give the region a special treatment. He also announced the end of the country’s relationship with the World Health Organization and announced funds would be redirected to other organizations. He did not mention new tariffs or the end of phase one of the trade deal.
On Saturday, US President Trump said he would postpone a G-7 summit until September, and expand the list of invitees to include Australia, Russia, South Korea and India in a clear move to find support against China. Russia was expelled from the, back then G-8, in 2014 amid the conflict with Ukraine over Crimea. Other G7 members have ever since refused to let the country back in. Meanwhile, an Australian government spokesman said the country would welcome the invitation.
Earlier last week, German’s Chancellor Angela Merkel said on the EU has a “great strategic interest” in maintaining cooperation with China that would remain a top priority. Tensions may surge between the US and Europe over divergent views on China.
The EUR/USD pair settled around 1.1100, finally breaking its range to the upside. The ECB and US Nonfarm Payroll would have a critical rolE this week.
GBP/USD flirted with 1.2400 but retreated and settled around 1.2350. Over the weekend, EU’s chief negotiator Barnier said UK PM Johnson he is failing to honour the withdrawal agreement signed last year, and warned there would not be an “agreement at any cost.” The last round of Brexit talks will take place this week.
Gold closed the week around $1,730 a troy ounce, unchanged weekly basis, underpinned by mounting tensions between the US and China over different issues.
Crude oil prices surged at the end of the week, to close May with substantial gains. WTI settled above $35.00 a barrel, boosted ahead of the close by easing concerns ahead of US Trump’s speech.
Commodity-linked currencies closed the week with gains and near fresh-multi-week highs against the greenback, heading into the new week retaining their bullish stance.
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