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The Greenback Finds early Support. Economic Data to Play 2nd Fiddle to COVID-19 News

Bob Mason

Earlier in the Day:

It was a relatively busy day on the economic calendar this morning. The Aussie Dollar was in focus in the early part of the day, along with inflation figures from China.

Away from the calendar, COVID-19 updates provided direction early on. Concerns over a possible 2nd wave of new COVID-19 cases tested risk appetite early in the day. As lockdown measures ease, both China and South Korea have reported new clusters at the start of the week.

Looking at the latest coronavirus numbers,

On Monday, the number of new coronavirus cases rose by 63,120 to 4,242,959. On Sunday, the number of new cases had risen by 78,198. The daily increase was far lower than Sunday’s rise and lower than a 74,217 increase on the previous Monday.

France, Germany, Italy, and Spain reported 5,315 new cases on Monday, which was up from 3.549 new cases on Sunday. On the previous Monday, 3,642 new cases had been reported. A rise in the number of cases in Spain led to the uptick.

From the U.S, the total number of cases rose by 13,704 to 1,381,342 on Monday. On Sunday, the total number of cases had risen by 20,329. On Monday, 4th May, the total new number of cases had risen by 22,145.

For the Aussie Dollar

Business confidence figures for April were in focus early in the day. The NAB Business Confidence Index rose from a record low -66 to –46 in April.

While confidence saw a pickup from March record lows, the business conditions index fell from -22 to -34. The Employment Index slid by 15 points to -35, which is aligned with the April employment forecasts due out on Thursday.

The Aussie Dollar moved from $0.64435 to $0.64372 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.80% to $0.6437.

Out of China

Inflationary pressures eased in April. The annual rate of inflation softened from 4.30% to 3.30%, with consumer prices falling by 0.9%, month-on-month. Economists had forecast an annual rate of inflation of 3.7%.

Wholesale deflationary pressures picked up in April, with wholesale prices falling by 3.1% year-on-year. In March, wholesale prices had fallen by 1.5%.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.14% to ¥107.51 against the U.S Dollar, while the Kiwi Dollar was down by 0.33% to $0.6060.

The Day Ahead:

For the EUR

It’s another particularly quiet day ahead on the economic calendar. There are no material stats due out of the Eurozone to provide the EUR with direction.

The lack of stats leaves the EUR in the hands of chatter from Brussels and geopolitical risk on the day.

For the EUR, Brussels will need to look more likely than not to deliver a more sizeable stimulus package. An easing in lockdown measures would also need to continue.

One issue that governments will need to consider, however, is the threat of the 2nd wave of infections.

At the time of writing, the EUR was down by 0.17% to $1.0789.

For the Pound

It’s also another particularly quiet day ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

Updates from the UK government on plans to ease lockdown measures and Brexit will remain key drivers near-term.

With the UK government announcing plans to ease certain lockdown measures in July, the Pound and the economy is likely to come under more pressure.

At the time of writing, the Pound was down by 0.24% to $1.2305.

Across the Pond

It’s a relatively quiet day ahead on the U.S economic calendar.

Key stats include April inflation figures. The numbers are unlikely to have a material influence, however. Falling crude oil prices and lockdown measures will see deflationary pressures build, which is expected by the markets.

Outside of the numbers, chatter from Beijing and Washington will also be in focus on the day. There is also the fear of a jump in new COVID-19 cases as governments ease lockdown measures.

The Dollar Spot Index was up by 0.12% to 100.359 at the time of writing.

For the Loonie

It’s a quiet day on the economic calendar, with no material stats to provide the Loonie with direction.

News of a rise in new cases in China and South Korea has weighed on risk sentiment, however. A 2nd wave would be catastrophic for the global economy and weigh heavily on the demand outlook for crude…

At the time of writing, the Loonie was up by 0.36% to C$1.4058 against the U.S Dollar.

This article was originally posted on FX Empire

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