USD Weekly Review (May 11 – 15)

USD Weekly Review (May 11 – 15)

The Greenback beats all challengers this week despite horrible U.S. economic updates and downbeat rhetoric from various Federal Reserve members.

It’s likely that negative global risk sentiment helped bring in traders to USD due to its “safe haven” status, and it’s also probable that the Fed’s re-iteration of no plans to take interest rates to negative may have helped the Dollar’s strength as well.

Overlay of USD Pairs: 1-Hour Forex Chart
Overlay of USD Pairs: 1-Hour Forex Chart
USD Weekly Performance from MarketMilk
USD Weekly Performance from MarketMilk

United States Headlines and Economic data

Monday:

‘A bill has to come due for China’: White House advisor Navarro threatens coronavirus retaliation.

Minneapolis Fed president says ‘slow, more gradual’ recovery is more likely.U.S. has no need to buy back debt, will take advantage of low-interest rates: Mnuchin.

America reopening: Dozens of states including Michigan, Ohio ease coronavirus restrictions this week.

Increased global risk aversion sentiment on rising US-China tensions and fears of a new infection wave was likely the catalyst for the euro and franc’s early week strength.

Tuesday:

U.S. President Trump not interested in reopening U.S.-China trade deal negotiations.

April consumer prices post the largest drop since 2008.

The Fed is starting its program to purchase corporate bond ETFs.

Small Business Optimism Continues Two Month Slide in April – NFIB Research Foundation.

China announces new tariff waivers for some U.S. imports.

Economy Has Likely Bottomed, Poised for Rebound, Says Fed’s Barkin.

Fed’s Bullard Says a Prolonged Shutdown Risks Bankruptcies, Depression.

A bit of up-and-down price action for USD on the session, once again on news headlines and risk sentiment flows.

More fears of a second coronavirus wave sparked risk-off sentiment during the Asia session, but hopes of an economic recovery as countries end lockdown restrictions turn traders to positive sentiment during the London trading session.

  Recovery Signs Encourage Safe Haven Flows Out Of U.S. Dollar

Risk sentiment swings back to negative to push USD higher during the U.S. session on the dire pandemic outlook and more headlines of rising US-China tensions.

Wednesday:

Powell says more policy help may be needed to pull the US out of the economic downturn

US producer prices tumble in April

Powell says the Federal Reserve is not considering negative interest rates

Fed’s Powell says the economy may face ‘extended period’ of weak growth

Fed’s Mester sees a recovery or a ‘much more dire’ scenario as equally possible

Trump says he disagrees with Powell on negative interest rates

Risk-on sentiment during London session on lockdown easing had the Dollar falling back, but it was a quick flip to risk-off sentiment during Fed Chair Powell’s warning of extended economic weakness that had USD popping higher against most of the major currencies during the U.S. session.

Thursday:

China to allow imports of barley, blueberries from the U.S.

U.S. import prices post largest drop in over five years.

U.S. weekly jobless claims total 2.981 million, bringing coronavirus tally to 36.5 million.

Trump says a strong U.S. dollar is ‘great’.

Friday:

U.S. Retail sales plunged a record 16.4% in April, far worse than predicted.

New York Manufacturing Index Rebounds But Still Indicates Sharp Contraction.

Consumer sentiment unexpectedly rises after massive U.S. fiscal stimulus.
U.S. business inventories decline further in March.

Coronavirus boosts U.S. layoffs; job openings fall.

Fed warns of ‘significant’ financial vulnerabilities from the pandemic.

Risk-off sentiment picked up during the Friday session to extend the Dollar’s gains against the risk currencies, but pullback slightly against the “safe havens.”

  Daily Market Outlook, May 19, 2020 

This shift was likely on a combination of weak economic updates from China, Germany, and the U.S., as well as on negative vibes on U.S.-China relations. (Trump administration moves to cut Huawei off from global chip suppliers)

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