GBPUSD, H1
The commodity currencies have traded firmer concomitantly with a rise in stock markets, which have posted moderate gains in Asia-Pacific markets and had a positive start in Europe, and the S&P 500 futures have rallied by over 1%. This came after Fed Chairman Powell warned that the Fed is not out of ammunition, and could do more, while warning that he wouldn’t bet against the US economy neither in the short nor the long run. ECB chief economist Lane also said that the central bank can extend the PEPP programme in size and/or duration. Oil prices gained, with June WTI crude prices (on the last day before roll over to July contracts) hitting a nine-week high at $31.24, buoyed by signs of dropping supply and rising output as global economies reopen from lockdowns. On Friday, data showed the number of operating US oil and natural gas rigs to have fallen to a record low for a second consecutive week. Gold and Silver continued to gain traction, with both touching their respective R2 levels; Gold at $1765 and Silver $17.32.
In currencies, AUDUSD lifted above 0.6450 after closing on Friday at 0.6415. USDCAD ebbed to a low at 1.4063, down from Friday’s close at 1.4110, though remaining above Friday’s low at 1.4016. EURUSD, meanwhile, plied a narrow range in the lower 1.0800s, and USDJPY remained directionally immobile in the lower 107.0s. The Pound extended losses seen last week, with Cable edging out a fresh near-eight-week-low at 1.2076 and EURGBP lifting to a seven-week high at 0.8960. The latest round of trade talks finished on Friday without offering much sign of encouragement, and with the UK government repeating again that it is prepared to walk away from negotiations. This maintains the risk that the UK might at year-end leave the post-Brexit transition membership of the EU’s single market without a new trade deal in place. In data, Japan Q1 GDP numbers confirmed that the country is deep in recession, although slightly better than expected at -1.9% q/q.
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Stuart Cowell
Head Market Analyst
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