Forex News Timeline

What you need to know on Monday, May 1st: The greenback closed the week with losses against most major rivals, hit by dismal US data and relief spurring demand for high-yielding assets triggered by US President Trump speech. Trump said that China broke its word to ensure the autonomy of Hong Kong. As a result, the US administration will begin the process to eliminate policy exemptions that give the region a special treatment. He also announced the end of the country’s relationship with the World Health Organization and announced funds would be redirected to other organizations. He did not mention new tariffs or the end of phase one of the trade deal. On Saturday, US President Trump said he would postpone a G-7 summit until September, and expand the list of invitees to include Australia, Russia, South Korea and India in a clear move to find support against China. Russia was expelled from the, back then G-8, in 2014 amid the conflict with Ukraine over Crimea. Other G7 members have ever since refused to let the country back in. Meanwhile, an Australian government spokesman said the country would welcome the invitation. Earlier last week, German’s Chancellor Angela Merkel said on the EU has a “great strategic interest” in maintaining cooperation with China that would remain a top priority. Tensions may surge between the US and Europe over divergent views on China. The EUR/USD pair settled around 1.1100, finally breaking its range to the upside. The ECB and US Nonfarm Payroll would have a critical rolE this week. GBP/USD flirted with 1.2400 but retreated and settled around 1.2350. Over the weekend, EU’s chief negotiator Barnier said UK PM Johnson he is failing to honour the withdrawal agreement signed last year, and warned there would  not be an “agreement at any cost.” The last round of Brexit talks will take place this week. Gold closed the week around $1,730 a troy ounce, unchanged weekly basis, underpinned by mounting tensions between the US and China over different issues. Crude oil prices surged at the end of the week, to close May with substantial gains. WTI settled above $35.00 a barrel, boosted ahead of the close by easing concerns ahead of US Trump’s speech. Commodity-linked currencies closed the week with gains and near fresh-multi-week highs against the greenback, heading into the new week retaining their bullish stance.

The troy ounce of the precious metal closed the week virtually unchanged near $1,730 after staging a decisive rebound in the second half of the week. Although the XAU/USD pair seems to be struggling to find direction since surging to fresh multi-year highs at $1,765 earlier in May, next week's key macroeconomic events could change that. Coming up next week On Monday, the IHS Markit will release the final reading of May Manufacturing PMI data for China, Germany, the eurozone, Canada and the United States. Later in the day, the ISM's Manufacturing PMI from the US will be featured in the economic docket as well. If these data show the positive impact of reopenings on the manufacturing sector, risk-on flows could weigh on gold. On Wednesday, the IHS Markit will publish the final version of Services PMI data for China, Germany, the eurozone and the United States. Unemployment Rate figures for Germany and the euro area will be released during the European session. On Thursday, the European Central Bank (ECB) will announce its interest rate decision and publish the monetary policy statement. If the ECB expands its Pandemic Emergency Purchase Programme (PEPP) we could see a positive reaction in global stock markets, which could make it difficult for gold to find demand as a safe-haven. On Friday, the Nonfarm Payroll Report (NFP) from the US will be watched closely by the market participants. 

The economic activity in China's manufacturing sector expanded for a third straight month in May, albeit at a softer pace than it did in April, the National Bureau of Statistics (NBS) reported on Sunday. The NBS Manufacturing Purchasing Managers' Index (PMI) edged lower to 50.6 from 50.8 in April and came in slightly worse than the market expectation of 51. Further details of the publication revealed that the Non-Manufacturing PMI improved to 53.6 from 53.2 in the previous month to show continuing expansion at a robust pace in the service sector.