GBP/EUR: Euro In Focus Ahead Of Barrage Of Data Releases
  • German IFO sentiment index expected to rebound in May
  • Austria, Denmark, Sweden and Netherlands oppose €500 EU recovery fund
  • Cooling US – Sino tensions boost USD amid protests in Hong Kong
  • At 08:00 UTC, EUR/USD trades -0.2% at US$1.0880 >> Real time exchange rate

The Euro is under pressure at the start of the week, moving lower versus the US Dollar and paring some gains from the previous week. The Euro US Dollar exchange rate gained 0.8% across the previous week, closing on Friday at US$1.0902, down from the three-week high of US$1.1010 reached on Thursday.

At 08:00 UTC, EUR/USD is trading -0.2% at US$1.0880 ahead of German IFO sentiment data and amid rising US – China tensions. The US is closed today in observance of Memorial Day public holiday.

The German IFO survey release for May will be closely watched.  Analysts are expecting a slightly firmer reading of 78.3, up from 74.3 in April.  The uptick in sentiment comes as countries across Europe continue to ease lock down restrictions.

Last week, the Euro finished on the front foot boosted by a French German agreement of a €500 billion European recovery fund, aimed at supporting those sectors and countries hardest hit by the coronavirus crisis. The agreement includes plans for joint debt, a significant change in European policy for both France and Germany. However, the plans are being objected by the more frugal northern countries of Sweden, Denmark, Austria and Netherlands.

The safe haven US Dollar has eased back from earlier highs in the Asian session as relations with China continue to cool and as thousands of protestors took to the streets in Hong Kong.

China formally tabled the national security laws for Hong Kong and Macau as the National People’s Congress opened on Monday.

Tensions were already running high between US and China. The situation in Hong Kong is just aggravating things further.

Chinese foreign minister Wand Yi warned that the two powers were heading towards a new cold war after President Trump threatened strong action should the national security law be actioned.

On Friday, the US Commerce Department added 33 Chinese companies to its blacklist.

There is no US economic data due for release today. Sentiment will continue to drive the US Dollar. Investors will look ahead to the release of US consumer confidence and new homes data tomorrow.


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