Divided Europe: The battle between loans and grants
The EC is due to present today its proposal of EU budget for the period 2021-27 and the details of the recovery plan. It will open a long and intense period of negotiations between member states regarding the financial instrument that could be used (loans or grants) to help countries in need. A final agreement is expected by at the next EU Council meeting in June. In the interim, Europe is once again wasting precious time needed to fight the crisis.
FX Update: Remarkable complacency as USDCNY nears trigger zone
Strong risk sentiment has boosted risky currencies to new cycle highs versus the US dollar in many places, but at the same time, the elephant in the room is the USDCNY rate bumping up against the 2019 highs and whether US-China tensions see China choosing to pull the trigger and allowing the yuan to drift lower.
Market Quick Take - May 27, 2020
US indices rose to new highs through major resistance yesterday, but were sold rather heavily into the close, keeping the technical situation somewhat in limbo. Overnight saw what seems the inevitable bounce-back in risk sentiment, even as the USDCNY exchange rate has pressed higher and could trigger unease on whether China intends to allow its currency to weaken further.
FX Update: AUD and NZD first to try to push USD over the edge.
Just as the US equity market is challenging above key resistance and risk sentiment globally remains strong, measures of the broad US dollar are looking at key supports as the US returns from the long holiday weekend today. The next couple of sessions look pivotal for establishing whether USD bears can establish real momentum.