Weekly Market Review - May 27-31

This week, the US dollar has been the best performer among Forex majors after the Japanese yen. The American currency is supported by a strong labour market and a less than anticipated GDP deceleration. EUR/USD fell 0.51% on the week.

Elsewhere, Japanese currency was supported by better-than-expected industrial output data and an increase in retail sales. Besides, Japan sees a robust labour market too. The Yen rose 0.51% against the US dollar and 1.00% against the euro.

In the cryptocurrency market, Bitcoin exceeded the $9,000 mark for the first time since May 2018, but it fell on Friday and currently trading at around $8,300.

Macroeconomic News

European Sentiment is Finally Reviving

The European Commission (EC) said on Tuesday that the economic sentiment in the eurozone was better than expected this month, showing a positive move after ten negative months in a row. The economic mood is driven by more optimism in the services and industry sectors and also among consumers. The EC’s sentiment index rose 105.1 in May from 103.9 recorded last month, while analysts expected flat dynamics.

Bank of Canada Keeps Rates at The Same Level

On Wednesday, the Bank of Canada left the rates unchanged, in line with analysts’ expectations. The bank officials relied on indications that the economic slowdown was temporary. However, the central bank will continue to be watchful and monitor the economic development. The overnight rate was left at 1.75%. The Bank of Canada expects inflation to maintain close to its target at 2% in the coming months. At the end of last month, the bank lowered its growth forecast for H1 2019 to 1.2% from 1.7%.

European Companies Hit by Uncertainties Over Brexit

Uncertainties over Brexit have put pressure on European businesses over the last six months, according to a survey carried out by insurer CAN Hardy. The company found that only half of the continent’s business leaders were confident about the potential of their firms to grow. The figure is way below the 70% mark recorded in November of last year. On the UK’s side, only 36% of British company leaders were confident, down from 39% in November.

US GDP Growth Revision Gives Hopes

The growth of the US gross domestic product (GDP) for the last quarter was revised down less than anticipated, as consumption and exports performed better than preliminary reports. The Commerce Department said on Thursday that inflation-adjusted GDP rose at a 3.1% annualised rate in the first quarter that ended in March, compared to the initially released figure at 3.2% and economists’ expectations for a revision to 3%.

US Jobless Claims Data Suggests Strong Labor Market

The number of US citizens applying for the first time for unemployment benefits slightly increased last week, pointing to a strong labour market despite slowing economic growth. The Labor Department announced on Thursday that initial jobless claims rose last week by 3,000 to a seasonally adjusted 215,000, in line with analysts’ expectations. Data for the previous week was revised up to indicate 1,000 more applications than initially reported. The four-week moving average fell 3,750 to 216,750 last week.

Japanese Unemployment Fell to 2.4%

Japan’s unemployment decreased last month while the availability of jobs remained at a high level, according to government data published on Friday, suggesting a stable labour market. The seasonally adjusted jobless rate decreased to 2.4% from 2.5% recorded in March, the Internal Affairs ministry said. The figures are in line with economists’ forecasts. The ratio between jobs and applicants maintained unchanged at 1.63, also in line with expectations.

Upcoming News to Watch

Next week on Tuesday, the UK Parliament will have another tentative to vote on a Brexit deal, which might drive the British pound. On Wednesday, the UK will release its services PMI data.

Several important economic updates will come from Europe. Thus, the eurozone will publish inflation and unemployment data on Tuesday and quarterly and annual GDP performance on Wednesday. On Thursday, the ECB will present its interest rates decision and monetary policy statement.

On Wednesday, markets in Singapore and India will be closed for Hari Raya Puasa and Eid-Ul-Fitr holidays, respectively. South Korea will close its markets on Thursday due to the Memorial Day, while Hong Kong and China won’t operate on Friday to celebrate Tuen Ng Day holiday.

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