Here is what you need to know on Thursday, May 14:
The market mood has soured after Jerome Powell, Chairman of the Federal Reserve, rejected calls for negative interest rates. Ongoing Sino-American tensions, gloomy forecasts, and also disappointing Australian jobs figures are weighing on the mood.
Powell painted a gloomy picture of the economy and vowed to add additional policy measures to prevent long-term damage to the economy, also calling the government to do more.
However, he rejected the idea of setting negative rates and said that also his colleagues' position is unchanged. That sent stocks down and the dollar up.
See Powell Analysis: Doom, gloom, and no negative rates set to tank stocks, boost dollar
Bond markets' pricing has been flirting with the sub-zero borrowing costs and President Donald Trump also wanted this "gift." While the president called Powell the "Most Improving Player" he also criticized the chairman for not setting negative rates.
Trump also kept up the pressure on China by saying that coronavirus's impact is 100 times stronger than the trade deal with the world's second-largest economy. Global COVID-19 cases have topped 4.3 million and deaths are nearing 300,000. US mortalities are above 84,000 according to Johns Hopkins.
Anthony Fauci, the White House's leading doctor on coronavirus, repeated his warnings that reopening the economy too quickly could trigger flare-ups. Trump said these comments are unacceptable and that the expert is playing "both sides of the equation." Firing Fauci could add another drag on the economy.
US economy: Goldman Sachs has updated its forecasts, warning that the unemployment rate could leap to 25%. Treasury Secretary Steven Mnuchin expressed optimism that with safely opening the economy, a rebound is on the cards. Weekly jobless claims for the week ending May 8 are expected to show an increase of 2.5 million claims, fewer than the previous week yet still staggering numbers.
See Initial Jobless Claims Preview: Marking time on the bottom
GBP/USD has been one of the biggest losers amid an ongoing UK lockdown and as the nation is getting ready for a long recession. Chancellor of the Exchequer Rishi Sunak extended the furlough scheme and Andrew Bailey, Governor of the Bank of England, opened the door to further bond-buying. Moreover, Bailey did not rule out directly funding the government. He will speak again later on Thursday.
EUR/USD has dropped in range but has yet to test the lows. Italy approved a new €55 billion stimulus budget and bond markets seem to accept it, despite tensions between the German constitutional court and the European Central Bank, which is supporting the government.
Australia reported a loss of 594,300 jobs in April, worse than expected. While the Unemployment Rate rose to only 6.2%, participation fell sharply to 63.5%. The Aussie and the kiwi both dropped in response.
Oil prices have remained stable after inventory data showed a surprising drawdown and amid speculation that other countries will follow Saudi Arabia with additional, voluntary cuts. Demand from China is on the rise.
Cryptocurrencies are edging higher with Bitcoin trading around $9,300, several days after the halving event.
More Move fast and leverage trades, what to buy low and what to sell high – Interview with Steve Ruffley
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD trades deep in red below 1.0300 after strong US jobs report
EUR/USD stays under bearish pressure and trades below 1.0300 in the American session on Friday. The US Dollar benefits from the upbeat jobs report, which showed an increase of 256,000 in Nonfarm Payrolls, and forces the pair to stay on the back foot heading into the weekend.
GBP/USD drops toward 1.2200 on broad USD demand
GBP/USD extends its weekly slide and trades at its weakest level since November 2023 below 1.2250. The data from the US showed that Nonfarm Payrolls rose by 256,000 in December, fuelling a US Dollar rally and weighing on the pair.
Gold ignores upbeat US data, approaches $2,700
Following a drop toward $2,660 with the immediate reaction to strong US employment data for December, Gold regained its traction and climbed towards $2,700. The risk-averse market atmosphere seems to be supporting XAU/USD despite renewed USD strength.
Sui bulls eyes for a new all-time high of $6.35
Sui price recovers most of its weekly losses and trades around $5.06 at the time of writing on Friday. On-chain metrics hint at a rally ahead as SUI’s long-to-short ratio reaches the highest level in over a month, and open interest is also rising.
Think ahead: Mixed inflation data
Core CPI data from the US next week could ease concerns about prolonged elevated inflation while in Central and Eastern Europe, inflation readings look set to remain high.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.