Euro Stays Under Pressure of Weak Data, US Dollar Strengthens

Market Reviews

The US dollar continues to grow, while the dollar index is held at the highs of 2018. The dollar extends gains versus euro and Swiss franc, but stays in a tight range against the British pound, Australian dollar and Canadian dollar. US employment data for April were weaker than expected, but still strong enough to support arguments in favor of further increases in Fed interest rates. Additional pressure on the euro was provided by weak data on production orders in Germany and the confidence of investors in the Eurozone from Sentix, which sent the EUR/USD pair to new lows.

German Factory Orders fell by 0.9% in March after a 0.2% drop in the previous month. Analysts had on average predicted a 0.5% rise in orders. Eurozone Retail PMI fell to 48.6, marking the first contraction since March 2017. Germany retail PMI fell to 51.0 (9-months low). France retail PMI hit 2 months high at 50.1. Eurozone Sentix Investor Confidence declined to 19.2, below the forecast of 21.2 points. Swiss CPI increased by 0.2% mom, 0.8% yoy. Foreign currency reserves grew to CHF 757B.

In its latest issue of the economic bulletin, the European Central Bank (ECB) highlighted concerns about a tariff war that could adversely affect the recovery of world trade in the future. So, the ECB emphasizes that a full-scale trade war is fraught with an increase in import prices and production costs, it will also hit household purchasing power, consumption, investment and employment.

The China’s foreign exchange reserves fell to USD 17.97B in April from USD 3.143T to USD 3.125T and marked a five months low. In SDR terms, Foreign currency reserves grew 11.3 B from 2.162T to 2.173T. Gold reserves was unchanged at 59.24 million. Total reserves declined from USD 3.240T to USD 3.221T.