U.S. – GDP Major Event of the Week
The central banks around the world took center stage last week, but this week the US GDP report for the first quarter is the major highlight.
Greenback Performs Well, Sterling Flops
The U.S. Dollar was last week’s winner, and it outperformed all the other major currencies except for the Japanese Yen, which performed at a rate of 0.46% higher than the greenback. The biggest win for the USD was against the sterling by 1.53% last week. The USD also went up by 0.71% against the EUR, 0.63% against the NZD, 0.43% against the Aussie, and 0.18% against its Canadian neighbor. President Trump considering a $1 trillion economic stimulus and China speeding up its purchase of United States farm goods were some of the news that helped the greenback’s excellent performance.
The sterling performed worse against its peers, thanks to weak U.K. employment data and expanding stimulus from the Bank of England. The most significant loss was against the JPY, with the GBP losing 1.97% of its value against the Yen. The GBP also fell by 1.53% against the USD, 1.52% against the CHF, 1.36% against the CAD, 0.85% against the EUR, 1.04% against the AUD, and 0.89% against the Kiwi.
U.S. GDP In Focus
Eurozone Flash PMIs: Tuesday
Europe’s service sector remains down at the moment but showed signs of improvement in the April data. The PMIs for Germany and the Eurozone were above 30 points, while that of France was 36.6. The manufacturing sector also continues to underperform, with the reading in April showing below the 50-level. German manufacturing PMI surged to 36.6, while that of the Eurozone was 39.4. The French manufacturing PMI stood at 40.6 points. The readings for May are expected to improve.
U.K. Flash Manufacturing PMI: Tuesday
The U.K. manufacturing sector has been in a downward spiral as factors are shut down or operate at limited capacity because of the pandemic. In May, the PMI was 40.7, and it is expected to reach 45.2 points in June.
U.S. Manufacturing PMI: Tuesday
In April, the U.S. Manufacturing PMI was a weak 39.8 points. However, it is expected to reach 50.0 in May, which separates contraction from expansion. An increase in PMI would see the greenback perform excellently this week.
U.S. GDP: Thursday
The GBP is the most significant event of the week and shows the level of damage the Coronavirus pandemic has caused to the economy. Analysts are expecting a sharp decline in Q1 GDP, with some of them estimating -5.0%. If the GDP figures come out better, then the dollar would most likely escape losses and record significant rally.
U.S. Unemployment Claims: Thursday
The jobless claims are expected to continue to decline. The estimate is around 1.3 million. The numbers have been extremely high, but they are below six million recorded in April.
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