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The Euro-zone Sentix investor recovered to -24.8 for June from -41.8 the previous month. Although this was slightly below consensus forecasts, the index is now above the troughs recorded in 2009 and 2012, maintaining expectations of economic recovery.  

According to sources, the German government will meet on Friday to discuss the implementation of the EUR130bn stimulus package including a temporary cut in VAT and incentives for retail spending. Markets will also monitor political rhetoric ahead of Thursday’s important Eurogroup meeting

The Euro edged lower during the European session with a retreat to the 1.1270 area as the US dollar also attempted to extend the correction seen after Friday’s employment data. Overall trading was subdued with a lack of fresh market incentives.

In testimony to the European Parliament, ECB President Lagarde stated that the central bank would make sure that higher borrowing needs by governments would not translate into higher interest rates for the private sector. She reiterated that the bank remained committed to its mandate and will continue to monitor proportionality of its instruments. Overall confidence in the single currency remained firm as German bond yields moved higher.

There was an element of caution ahead of Wednesday’s Federal Reserve policy meeting with markets waiting for fresh guidance from the central bank.

Overall, the Euro settled just below 1.1300 at the European close with the dollar hampered by fresh gains across the commodity currency complex. There were expectations of slightly less dovish Fed rhetoric with the Euro edging lower to just below 1.1300 in early Europe on Tuesday as German April exports declined sharply.


Overall risk appetite held firm ahead of the New York open on Monday, but the yen was able to resist selling pressure with the dollar initially retreating towards the 109.00 area as the Japanese currency secured a wider correction stronger. The New York Federal Reserve survey recorded an increase in inflation expectations due to expectations of higher fuel and food prices which could have some impact on the Fed statement and consumers were slightly more optimistic over their finances.

The yen gained further notable ground during US trading with lower oil prices also having some impact in supporting the Japanese currency as the dollar retreated to lows around 108.25. The yen gained support despite further significant gains in US equities as the Nasdaq index posted a record high with the steeper yield curve also not having any impact in supporting the US currency with a decline in reduction in selling of defensive currencies.

The yen maintained a firmer tone in Asia on Tuesday with the dollar dipping to just below 108.00 before trading around this level in early Europe.


A spokesman for Prime Minister Johnson stated that the intention is to open non-essential retail outlets from June 15th, but the opening would be conditional with restaurants and cafes not opening until July 4th. The gradual re-opening of the economy provided an element of UK support, although there were still important concerns that the UK would lag behind other European economies which limited potential support.

Sterling also gained some support from expectations of a recovery in the global economy, especially with commodity currencies still making net gains on the day.

There was, however, selling interest above 1.2700 against the US dollar and lows below 1.2650 before a strong rebound while the Euro edged just below 0.8900.

Bank of England chief economist Haldane stated that economic activity has collapsed and that the bank was possibly seeing an unprecedented level of inactivity in the labour market due to furloughed staff and people being made unemployed. There was, however, no significant reaction to the comments with Sterling holding firm. BRC data recorded a like-for-like annual increase in retail sales of 7.9%, but overall sales declined by 5.9%. The UK currency again peaked around 1.2730 against the dollar before a retreat to near 1.2700 amid a slightly more cautious tone in global markets with the Euro around 0.8885. 


Swiss sight deposits declined to CHF680.1bn from CHF681.6bn previously and the first weekly decline since the middle of January. The franc had moved sharply lower during the week and this data suggests that the National Bank had stopped intervening to prevent currency appreciation as the currency lost ground in spot markets.

The Swiss franc regained ground during the day with the Euro retreating to near 1.0830 from highs close to 1.0900 while the dollar retreated back below the 0.9600 level. The franc gained some support as the yen also gained ground with the dollar around 0.9575 on Tuesday as Swiss unemployment rose to 3.4% from 3.1%.



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