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Record-breaking contraction

Today’s news headlines:

‘UK economy plunged by record 20% under virus lockdown’. The UK economy posted a record 20.4% contraction in April as households and businesses suffered from the effects of a total lockdown. The finer details show virtually every area of the economy took a hit, with pubs, education, health, and car sales contributing the most to the worst monthly UK economic contraction on record. Although the government has already moved forward plans to reopen the economy, this data release could prompt louder calls to get the whole economy open sooner, despite internationally growing concern that a second wave may be approaching. (Bloomberg)

‘Mnuchin says US can’t shut down economy even if virus resurges’. As early signs of a second wave appear in the US, Treasury Secretary Steven Mnuchin said the country shouldn’t shut down the economy again. He stated: ‘We’ve learned if you shut down the economy, you’re gonna create more damage – medical problems get put on hold.’ The first lockdown in the US caused unemployment to reach 13.3% in May and prompted large fiscal packages, of which some key aspects will expire in the coming weeks. (Bloomberg)

Today's events, rates, and data 

  • The sharp reversal in risk appetite continued overnight as European equity futures pointed to further declines in today’s session. Oil prices fell 13% yesterday finding a floor at $35, adding pressure to the Canadian Dollar. The US Dollar continued to climb from Wednesday’s lows while the Pound fell.

Today's events

UK GDP growth in April contracted by 20.4%, while Industrial and Manufacturing Production both missed expectations.
French year-on-year CPI in May came in at 0.4%, beating expectations.
US University of Michigan Sentiment is due out at 3.00pm.

Interbank rates:

GBP/USD: 1.2580
GBP/EUR: 1.1130
EUR/USD: 1.1300
USD/CAD: 1.3610