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Here is what you need to know on Thursday, May 7:

The Bank of England has left its interest rate and QE program unchanged, but two members surprised with voting for expanding the bond-buying program. The pound has reacted positively on hopes for further monetary and consequent fiscal stimulus despite the gloomy picture the BOE painted – a crash of 14% in UK economic output in 2020.

See BOE Quick Analysis: More QE seems only a matter of time, GBP/USD has room to rise

US President Donald Trump said the coronavirus crisis is worse than Pearl Harbour and 9/11 and continued blaming China for not handling the problem “at the source.” He also said that the administration is checking whether Beijing fulfilled its obligations in the trade deal. Tensions between the economic giants were weighing on sentiment but the mood has improved. 

Chinese exports beat expectations by rising in April while exports dropped. The relatively upbeat news contributed to improving the mood and allowed the safe-haven dollar and yen to take a breather. US stocks fell on Wednesday and futures are on the rise now.  

US data: ADP’s Non-Farm Payrolls report showed a loss of 20.236 million private-sector jobs in April, in a sign of things to come in Friday’s Non-Farm Payrolls report. It joined weak employment components in the ISM Purchasing Managers’ Indexes.

See:

  • US ADP Payrolls Drop 20 million: And that’s only half the story, NFP is the other
  • ADP Quick Analysis: Eight years of job gains vanished, official NFP could tank stocks, boost the dollar

Weekly jobless claims for the week ending May 1 – after April’s NFP survey – are due out later and they will likely be in the millions.

See US Initial Jobless Claims Preview: Priced in disaster

Trump reversed course and decided to leave the White House coronavirus taskforce intact. However, he continued urging states to open up the economy despite a stubbornly high number of cases outside the New York area. He acknowledged that many will suffer. Markets want to see a return to normal but fear a second wave of infections.

EUR/USD is struggling around 1.08:: The EU’s economic forecasts paint a gloomy picture for the eurozone, especially for Italy and France, which may near Gross Domestic Product plunges of nearly 10% according to the projections. German Factory Orders plunged by 15.6% and industrial output by 9.2% in March.

Spreads between German and Italian bonds have edged higher, indicating fears that the European Central Bank will have limited firepower to help hard-hit Italy in times of trouble. Moreover, Euribor levels have also edged higher, raising mortgage costs for millions across the continent. The German constitutional court’s ruling that the ECB’s QE is partly illegal continues weighing on the common currency. Christine Lagarde, President of the ECB, will speak later on. 

UK: Prime Minister Boris Johnson will lay out the plans for lifting the lockdown only on Sunday, with only general details coming out so far. While COVID-19 statistics have been improving, testing seems to remain lacking despite promises to ramp it up. In the meantime, the economy is suffering, with Construction PMI plunging to 8.2 points.

The Australian dollar has been able to recover also thanks to a surge in the country’s trade balance to A$10.6 billion. NZD/USD has also been edging higher as New Zealand Prime Minister Jacinda Ardern announced easing restrictions. 

Oil prices have stabilized with WTI hovering around $25. Hopes for a rebalancing of the market are supporting crude. Gold continues struggling below $1,700, albeit in a narrow range.

Cryptocurrencies continued marching higher, with Bitcoin trading above $9,200.