The British monthly GDP is announced on Friday at 09:00 MT time.
What drives the market on May 7?
The main focus is on the UK as the Bank of England made an announcement this morning. Let’s see what’s happening with the British pound and what else moves the market today.
The pound surged higher after the BoE had reported that interest rates and quantitative easing would stay unchanged. Previously, the central bank maintained the interest rate at 0.1% and increased its bond-buying program by 200 billion pounds. Moreover, Boris Johnson, the British Prime Minister, promised to start reopening of the economy on Monday. As a result, the market sentiment turned positive and the British pound gained.
Surprisingly, Chinese exports rose by 3.5% while analysts expected the 11% drop. However, imports decreased by 14.2%, while only the 10% decline was forecasted. The overall sentiment after the report was positive that the second-largest economy may recover faster than anticipated, and the Chinese yuan jumped. Moreover, the Australian dollar gained on upbeat Chinese export data.
Traders are waiting for tomorrow US unemployment rate, that is expected to be extremely high. Yesterday the ADP report revealed 20.2 million jobs lost that slightly exceeded the expected 20.5 million. That pushed the US dollar up.
The WTI oil price was growing up and then stopped on the $24 mark. As you remember, OPEC+ started to cut the oil production by 10 million barrels a day starting from May 1. It seems that the oil consumption is slowly recovering with the easing of lockdowns all over the world, but it may take a year to return to the pre-crisis level.
The main market tendency today is that the US dollar is rising against its major peers and riskier assets such as stocks and oil are plummeting.
The US unemployment claims are out on Thursday at 15:30 MT time.
The European Central Bank will publish the monetary policy statement with the interest rate decision on January 21, at 14:45 MT time.
Joe Biden is going to unveil a Covid-19 relief package of about $2 trillion. After this announcement, the 10-year Treasury yield rose, adding support for the USD.
The US dollar’s weakness offered a boost to emerging-market currencies and oil.