Forex Today: Can markets find a silver lining? Hong-Kong heightens Sino-US tensions, boosts dollar


Here is what you need to know on Friday, May 22:

The market mood has markedly worsened amid souring Sino-American relations, with worries about Hong Kong serving as the latest trigger. A mix of developments from central banks, data, and the next moves in lockdowns will determine Friday's trading. 

Titans clash: The US and China have been on a collision course for several days, and the straw that broke the camel's back was the news that Beijing is considering significantly limiting freedoms in Hong Kong. The US officials have criticized the move and the financial hub city-state is bracing for protests.

Other developments on that front include China's vow to retaliate for any bipartisan laws scrutinizing Chinese companies listed in the US. The National People's Congress will refrain from setting a growth target amid growing uncertainty. The Communist Party focuses on keeping people at work amid rising unemployment. 

The silver lining is that the world's largest economies both vowed to maintain Phase One of the trade agreement signed in January. That may soothe investors' concerns and change the mood.

US data: A big bulk of US figures published on Thursday was mixed. Weekly unemployment claims came out at 2.483, worse than expected, while Markit's preliminary Purchasing Managers' Indexes for May beat estimates. Existing Home Sales plunged to 4.33 million annualized, within expectations.

GBP/USD remains under pressure amid rising expectations for negative interest rates. Retail sales figures for April will likely show a double-digit plunge (see preview)  Markit's PMIs for May showed a recovery from records lows, but Britain remains in deep contraction. The UK is moving to lower its dependency on Chinese exports. 

The Bank of Japan announced a new loan scheme for small and medium businesses in a special meeting. Governor Haruhiko Kuroda and his colleagues left the interest rate unchanged at -0.10%. Japan is set to ease restrictions in the Tokyo region if infections continue falling. The country previously loosened the lockdowns in other hotspots. 

The European Central Bank's meeting minutes will shed light on the recent decision, where the Governing Council called on governments to do more and pledged to act if necessary. Any hints about upcoming decisions in the June meeting – another €250 billion of bond-buying is eyed – will shake the euro. Eurozone PMIsmostly beat expectations, albeit remained in depressed levels.

Gold is consolidating its losses after suffering a swift sell-off on Thursday and following hitting new 7.5 year highs early in the week.

Oil prices have ended their winning streak and WTI is trading below $32, adding to pressures on the Canadian dollar. The nation publishes retail sales figures for March later on Friday. 

Cryptocurrencies have extended their losses, with Bitcoin struggling to hold onto the $9,000 level. 

More: Negative Rates: Only good for downing currencies?

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!


Latest Forex News

Editors’ Picks

EUR/USD chops around amid end-of-month flows, ahead of Trump

EUR/USD is battling 1.11, close to the two-month highs amid choppy trading. Hopes for a fiscal boost in Europe and mixed satisfactory data have supported the currency pair. , Sino-American tensions are rising and investors await President Trump's China announcement.

EUR/USD News

GBP/USD advances amid US dollar weakness, shrugging off concerns

GBP/USD is trading above 1.23, edging higher amid US dollar weakness and Britain's gradual reopening. Intensifying Sino-American tensions and the Brexit impasse are ignored. 

GBP/USD News

Cryptocurrencies: $348M in matured derivatives boost the market

Futures and options contracts' expiration brings a wave of volatility to the crypto market. Ethereum takes advantage and attacks resistances in the market dominance chart, Bitcoin goes back. Ripple disappoints despite regaining the third place in market capitalization.

Read more

Canada's economy falls by 8.2% annualized in Q1, better than expected, USD/CAD shakes

The Canadian economy squeezed by an annualized rate of 8.2% in the first quarter of 2020, better than -10% expected. Quarterly, Gross Domestic Product (GDP) squeezed by 2.1%. Most of the downfall occurred in March, with a drop of 7.2%, better than 8.5% projected. 

Read more

WTI drops 4% and eyes $32 mark amid risk-off, weakening demand

The selling pressure around WTI (July futures on Nymex) accelerates following the break below the 33 level, as bears now target the 32 support zone heading into the key US macro data and US President Donald Trump’s response to the Hong Kong issue.

Oil News

Forex MAJORS

Cryptocurrencies

Signatures