· The dollar edged higher on Monday as worries about a standoff between the United States and China over civil liberties in Hong Kong fuelled demand for safe-haven currencies.
The yuan and the Australian and New Zealand dollars fell as risk-aversion hit foreign exchange markets.
Sterling was on the defensive after members of British Prime Minister Boris Johnson’s party called for the resignation of an influential aide for breaking travel restrictions during the coronavirus lockdown.
· The dollar edged up to $1.0887 against the euro on Monday, close to its strongest in a week.
The dollar bought 0.9729 Swiss franc, also close to a one-week high.
The greenback held steady at 107.72 yen.
In onshore trade, the yuan eased slightly to 7.1422 per dollar, approaching the lowest in more than seven months.
The British pound was little changed at $1.2175. Against the euro, sterling traded at 89.46 pence.
· Trading may be subdued on Monday with financial markets in Singapore, Britain and the United States closed for public holidays.
· EUR/USD Forecast: Risk-off likely to keep the pair under pressure
EUR/USD short-term technical outlook
The EUR/USD pair is neutral-to-bearish to according to the daily chart, given that it retreated from its 200 SMA, and is just above the 20 SMA, which lacks directional strength. The Momentum heads nowhere around its 100 level, while the RSI gains downward strength, now at around 51. In the shorter-term, and according to the 4-hour chart, the risk is skewed to the downside, as the pair has fallen below a now bearish 20 SMA. The Momentum indicator maintains its bearish slope well into negative ground as the RSI indicator stabilized around 45. A steeper decline is to be expected on a break below 1.0884, Friday’s low.
Support levels: 1.0885 1.0850 1.0810
Resistance levels: 1.0930 1.0975 1.1010
· China says to take action if U.S. undermines its interests in Hong Kong
China warned on Monday that it will take countermeasures if the United States insists on undermining its interests regarding Hong Kong, following the latest comments from Washington about possible sanctions over new national security legislation for the city.
· Japan will lift a state of emergency for Tokyo and remaining areas still facing restrictions on Monday, while the Nikkei reported a plan for new stimulus worth almost $1 trillion to help companies ride out the coronavirus pandemic.
· A slump in capital investments, private consumption and exports pushed the German economy into a recession in the first quarter, detailed data showed on Monday, giving a glimpse of the damage caused by the coronavirus pandemic.
The Federal Statistics Office said capital investments fell by 6.9%, private consumption by 3.2% and exports by 3.1% between January and March compared with the last three months of 2019.
This meant that private consumption took off 1.7 percentage points of overall economic activity and net trade shaved off 0.8 percentage points, translating into a first-quarter contraction of 2.2%, the steepest rate since 2009.
· Europe could target Silicon Valley with taxes to help it rebound from the coronavirus-fueled recession
Tech giants could be forced to pay higher taxes in Europe as governments search for new revenue to deal with the ongoing coronavirus crisis, three experts told CNBC.
Taxing tech firms such as Google, Facebook or Amazon has been a thorny subject in Europe. Countries failed to come up with a joint digital tax in 2019 and deferred the negotiations to the OECD (the Organization for Economic Cooperation and Development). In addition, some nations, such as France, decided to implement their own digital taxes regardless, but their actions sparked a trade spat with the United States.
· Oil prices rose on Monday, erasing earlier losses, as countries around the world continued to ease lockdown measures imposed to combat the coronavirus pandemic, boosting hopes for a recovery in fuel demand.
Amid quiet trading, with financial centres Singapore, London and New York all closed for holidays, Brent was up 6 cents, or 0.2%, at $35.19 a barrel by 0636 GMT. U.S. oil had gained 27 cents, or 0.82%, at $33.52 a barrel.
Both contracts have risen for the past four weeks, although prices are still down around 45% so far this year.
· WTI Price Analysis: Regains $33.00, still below immediate support-turned-resistance
Having initially slipped to $32.60, WTI Futures on NYMEX pulls back to $33.05, down 1.86% on a day, during the early Asian session on Monday.
Despite the black gold’s recent recovery, the quote stays below a short-term ascending trend line from May 14, at $35.25, which in turn keeps the upside capped.
Though, the energy benchmark’s pullback towards the monthly high of $34.74, on the successful break of $33.72, can’t be ruled out.
Alternatively, An upward sloping trend line from April 21, at $31.77 now, followed by another rising support line from May 04 around $30.75, can keep the black gold supported for a while.
In a case where the oil prices slip below $30.75, $30.00 may offer an intermediate halt before highlighting the 200-bar SMA level of $24.77.
Reference: CNBC, Reuters, Worldometers, FX Street
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