Here is what you need to know on Monday, May 18:
The market mood remains optimistic despite a stark warning from Jerome Powell, Chairman of the Federal Reserve, who warned that a full recovery may have to wait for a vaccine. Stocks and oil are on the rise and the US dollar is on the back foot.
Moreover, he said that it may take until late next year to recover and stressed that "we really do not know" and added that asset prices may decline. His 60 Minutes interview came after the US reported a sharp decline of 16.4% in retail sales in April, worse than expected. However, consumer confidence bounced in May.
More: US April Retail Sales: Is there a rebound ahead?
Sino-American relations: Peter Navarro, a senior White House adviser, and China hawk claimed that the world's second-largest economy sent infected people to spread the disease. American limits on Huawei are also in the mix. Hu Xijin, the nationalistic editor of the Global Times, tweeted that China needs to beef up its nuclear capacities amid threats from the US.
Gold is trading around $1,760, levels last seen in late 2012, and consolidating its gains. The precious metal is benefiting from central bank bond-buying schemes and falling yields.
See Gold Price Analysis: Symmetrical triangle breakout targets $1805 in the coming weeks
Japan has officially entered a recession with a drop of 0.9% in Gross Domestic Product in the first quarter, better than expected, yet on top of a downward revision to the fourth quarter of 2019. USD/J?JPY is stable above 107.
EUR/USD is clinging to its range around 1.08 as large European countries continue gradually lifting restrictions. Over the weekend, Spain and Italy reported the lowest number of deaths since March. Germany also reported a substantial fall and stated that the Reproduction rate is just under 1. Phillip Lane, Chief Economist at the European Central Bank, reiterated that his institution is ready to add further stimulus.
UK: A Bloomberg survey suggests that the Bank of England will likely increase its bond-buying program by around £100 billion in its upcoming meeting. Andy Haldane, Chief Economist at the BOE, did not rule out negative interest rates and other tools. GBP/USD has been consolidating its losses around 1.21.
Fraught Brexit negotiations sent sterling lower on Friday. Both the EU's Michel Barnier and the UK's David Frost acknowledged issues on the "level-playing field" topic.
Vaccine efforts: Oxford University has advanced with its trials for immunization against the disease. GSK a large pharma firm has vowed to manufacture potential vaccines on a large scale and prioritize the UK in deliveries.
WTI Oil has been extending its recovery, trading above $30. The increase in demand – albeit from a low point – and a drop in supply from the US and Saudi Arabia have pushed prices higher. The rollover of contracts may trigger choppy trading.
Cryptocurrencies have been on the rise with Bitcoin edging closer to the $10,000 mark. Ethereum and Ripple are also on the rise.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.