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Europe Roundup: Sterling tumbles on record-low retail data, trade tensions, European shares dip, Gold gains, Oil prices drop as China-U.S. tensions grow –May 22nd 2020

Market Roundup

• Tensions over Hong Kong unnerve world stocks

• UK April Retail Sales (MoM)  -18.1%,-16.0% forecast, -5.1% previous

• UK April Core Retail Sales (MoM)
 -15.2%,-15.0% forecast, -3.7% previous

• UK April Core Retail Sales (YoY)  -18.4%,-18.2% forecast, -4.1% previous

• UK April Retail Sales (YoY ) -22.6%,-22.2% forecast, -5.8% previous

• UK April Public Sector Net Borrowing 61.40B, 35.00B forecast, 2.33B previous

• UK April Public Sector Net Cash Requirement 89.544B, 7.208B previous

Looking Ahead Economic Data (GMT)    

• 12:30 Canada March Retail Sales (MoM) -10.0% forecast ,0.3% previous

• 12:30 Canada March Core Retail Sales (MoM) -5.0% forecast, -15.6% previous

• 13:00 Russia April PPI (YoY) -3.2% previous

• 13:00 Russia April PPI (MoM) -1.4% previous

• 17:00 U.S. Baker Hughes Total Rig Count 339 previous

Looking Ahead - Events, Other Releases (GMT)    

• 14:30 ECB's Lane Speaks

Currency Summaries

EUR/USD: The euro declined against greenback on Friday as flare-up in U.S.-China tensions over Chinese security measures in Hong Kong boosted safe haven appeal for greenback. Beijing is set to impose a new national security law on Hong Kong following last year’s often violent anti-China unrest that plunged the city into its deepest turmoil since returning to Chinese rule in 1997.The move is seen as a turning point, as leaders of the ruling Communist Party tighten control over China’s freest international city. Immediate resistance can be seen at 1.0960 (38.2 % fib), an upside break can trigger rise towards 1.0985 (Higher BB).On the downside, immediate support is seen at 1.0883(5 DMA), a break below could take the pair towards 1.0834 (23.6 % fib).

GBP/USD: Sterling declined against the U.S. dollar on Friday as fresh data showed retail sales fell by a record 18% as the coronavirus crisis hammered the economy and while U.S. - China tensions boosted demand for the dollar. British retail sales fell by the most on record in April due to the lockdown. In addition, Britain’s government borrowed more in April than it has in any month on record, pushing public debt close to 100% of gross domestic product, the highest since 1963, data showed on Friday. Immediate resistance can be seen at 1.2240 (11 DMA),an upside break can trigger rise towards 1.2330 ( 20 DMA).On the downside, immediate support is seen at 1.2162 (Daily low), a break below could take the pair towards 1.2085 (Lower BB).

USD/CHF: The dollar strengthened against the Swiss franc on Friday as worries about rising diplomatic tensions between the United States and China supported safe-haven demand for the greenback.Sino-U.S. relations have soured over a broad range of issues, including China’s treatment of the former British colony of Hong Kong and its response to the coronavirus pandemic, which is causing risk aversion to spread. The dollar 0.10% to 0.9715 against Swiss franc after posting its biggest gain in more than two weeks on Thursday. Immediate resistance can be seen at 0.9724 (23.6% fib), an upside break can trigger rise towards 0.9780 (Higher BB).On the downside, immediate support is seen at 0.9667 (55 DMA), a break below could take the pair towards 0.9618 ( 38.2 % fib).

USD/JPY: The dollar dipped against the Japanese yen Friday as demand for safe haven yen increased after China’s move to impose a new security law on Hong Kong threatened to escalate Sino-U.S. tensions. U.S.-China tensions have risen in the past few weeks over the source of the coronavirus pandemic, and China’s proposal on Thursday to impose security laws on Hong Kong prompted a strong warning from U.S. President Donald Trump. The tensions compounded fears of a slower global recovery from the economic damage wrought by the coronavirus, pressuring share markets but supporting the safe-haven yen. Strong resistance can be seen at 107.77 (38.2 % fib), an upside break can trigger rise towards 108.17 (Higher BB).On the downside, immediate support is seen at 107.57 (30 DMA), a break below could take the pair towards 106.57 (50 % fib). 

Equities Recap

European shares fell on Friday as a deterioration in U.S.-China ties compounded fears of a slower recovery from the economic damage wreaked by the COVID-19 pandemic.

At (GMT 12:00 ),UK's benchmark FTSE 100 was last trading down at 0.66 percent, Germany's Dax was down by 0.20 percent, France’s CAC finished was down by 0.06 percent.

Commodities Recap

Gold prices rose on Friday, following a sharp decline in the previous session, as escalating trade tensions between the United States and China lifted bullion's safe-haven appeal, though a stronger dollar kept gains in check.

Spot gold was up 0.5% at $1,733.58 per ounce by 0951 GMT, having slipped 1.4% on Thursday. U.S. gold futures    rose 0.8% to $1,736.

Oil prices fell on Friday as tensions rose between the U.S. and China and as Beijing failed to set target for economic growth this year, stoking concern that the coronavirus pandemic will overshadow fuel demand in the world’s second-largest oil user.

Brent crude was trading down $1.43, or 4%, at $34.63 a barrel by 0630 GMT, after falling to as low as $33.54.

West Texas Intermediate (WTI) crude dropped by $1.81, or 5.3%, to $32.11 a barrel, having slumped to $30.72 earlier.

Treasuries Recap

Italian 10-year government bond yields were set for their biggest fall in eight weeks, boosted by a European Union recovery fund proposal that could provide grants to help the highly-indebted country’s coronavirus-hit economy.

Euro zone bond yields were little changed in early trade. Germany’s 10-year benchmark was down 1 basis point to -0.51%. Italian 10-year bond yields were unchanged at 1.63%.
 

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