The euro held firm basking in the afterglow of a Franco-German proposal for a common fund that could move Europe closer to fiscal union while the yen remained near five-week lows amid mildly positive risk sentiment. The euro inched up 0.15% to $1.0943 near a two-week peak, opening the way for a test of its May 1 high of $1.1019. The common currency also fetched 1.06 franc, after rising almost 1.0% so far in the week, and could book its first monthly gain in six if the uptick is sustained. Against the yen, it stood near five-week highs of 118.20 yen. The U.S. dollar tacked on 0.1% against the yen to 107.87 yen, near a five-week high of 108.085 hit in U.S. trade yesterday. The safe-haven yen was on the back foot as broad market risk sentiment stayed upbeat, with U.S. stock futures gaining 0.7% in Asia, paring much of the losses triggered after a report from medical news website STAT said early data from Moderna’s COVID-19 vaccine was insufficient. Sterling was mostly flat at $1.2240, while the Australian dollar fetched $0.6545, after a two-month high of $0.6585 overnight. Gold prices rose as some investors sought the safe-haven asset on recession fears after a 30.2% decline in U.S. housing starts in April, the biggest percentage drop on record.
Europe’s Stoxx 50 index was upbeat this morning, quoting above 2902 as Europe slowly reopens for business. In the US. Federal Reserve Chair Jerome Powell told U.S. lawmakers that the Coronavirus Aid, Relief and Economic Security Act passed in March was “critical” to the Fed’s ability to expand credit to offset the economic blow from the coronavirus. The S&P 500 edged up, after its best one-day performance in six weeks, as investors attempted to glean information from a mixed bag of results from major retailers. The Dow Jones Industrial Average fell 30.68 points or 0.12% while the Nasdaq Composite added 74.72 points. Consumer discretionary and tech were the best-performing sectors, while financials and energy lagged.
The UK’s FTSE 100 dipped as data showed inflation fell to its lowest since August 2016 in the latest sign of the economic blow from the coronavirus outbreak. The blue-chip FTSE 100 was down 0.3%, as a report also questioned positive data from an early-stage trial of a potential coronavirus vaccine. The consumer price index dropped to an annual rate of 0.8% in April from 1.5% in March. The Bank of England says inflation could fall below 1% in the next few months. Meanwhile, the U.K. announced a post-Brexit tariffs regime, cutting import duties on many products while protecting industries such as automotive and agriculture. The plan is key to Britain’s effort to reposition its economy for global commerce but also gives leverage to the U.K. following complaints by Brexit negotiators that the EU is offering a “low quality” trade deal and wants the UK to “agree to the rules of their club” instead of treating it as just another trading partner.
The Netherlands will press ahead with a further easing of lockdown measures in June due to a steadily declining number of coronavirus infections and hospital admissions, Prime Minister Mark Rutte said, sending AEX25 above 520. The easing will take place nearly two and a half months after lockdown measures were imposed across the country of 17 million in mid-March. In Italy, Italian shops, hairdressers and restaurants finally threw open their doors yesterday as the country sped up efforts to bounce back from the coronavirus crisis after a 10-week lockdown. Italy was the first European country to impose nationwide restrictions in early March, only permitting an initial relaxation of the rules on May 4, when it allowed factories and parks to reopen. Italian bond yields fell yesterday also followed by Spanish and Portuguese ones after a Franco-German plan to support EU countries hard-hit by the pandemic.