April seasonal patterns weren’t supposed to work, but somehow they did. Even a strong fundamental issue such as the global recession amid the coronavirus couldn’t overwhelm it. That’s why May seasonal patterns may work as well.
Yen inches up on safe-haven demand
On Tuesday, the Japanese yen strengthened versus the evergreen buck against the backdrop of further political uncertainty in the European Union over Italy’s spending plans. As for the USD index, it rallied too.
The currency pair USD/JPY hit 112.57 losing 0.2%.
As Reuters informed over the weekend, the Italian cabinet actually expected the European Commission to decide to ask Italy to have its draft budget revised later this week.
Italy’s mind-blowing 2.3 trillion euro public debt happens to be one of the largest in the world. There’s no doubt it makes this European country extremely vulnerable as well as a potential source of contagion for other euro zone members, as Reuters pointed out.
Clashes will probably escalate between Brussels and Rome, especially in case the European Council starts an 'Excessive Deficit Procedure' against Rome.
It would require Italy to come up with a clear plan of corrective action to diminish its huge public debt, which currently accounts for up to 130% percent of the country’s GDP in contrast with the 60% allowed by the Maastricht rule.
In addition to this, recent reports ascertained that Brexit negotiations have stalled, causing speculation that UK Prime Minister Theresa May could be deposed by the opposition in her Conservative Party.
The EU council chief, Donald Tusk told that a no-deal scenario turned out to be more probable than ever before.
Assessing the purchasing power of the major American currency against its main opponents the USD index rallied by 0.4% being worth 95.79.
Besides this, the currency pair USD/CNY dived by 0.08% because the People's Bank of China set the reference rate of the national currency at 6.9338 versu the previous day's reading of 6.9444.
The Australian dollar declined by 0.3% hitting $0.7063 versus the greenback. The currency pair NZD/USD lost 0.4%.
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