By Peter Nurse
Investing.com – U.S. The dollar was largely unchanged in early European trade on Monday as investors weighed down the contradictory forces of bleak economic data and the gradual reopening of the world’s economy.
Kl. At 02.45 ET (0645 GMT), the one tracking the greenback against a basket of six other currencies stood at 99.785, up 0.02%, while essentially flat at 1.0843, pushing 0.1% higher to 1.2420. increased 0.4% to 107.12.
In Europe, stores and hairdressing salons can now reopen in France, the second-largest economy in the eurozone, as the country is scheduled to emerge cautiously from one of Europe’s strictest closures on Monday.
Many other European countries such as Denmark, Norway, Spain, Italy and Germany have also started or are planning to repeal closure measures, and even the United Kingdom, now the hardest hit country in Europe in terms of deaths, announced tentative plans to learn social distance measures. Sterling has risen by about 0.5% since Prime Minister Boris Johnson announced the measures on Sunday.
Across the pond, California, Michigan and Ohio, three of the important states for the U.S. manufacturing, has taken steps to allow factories and some companies to resume work.
However, the number of U.S. unemployment claims since the end of March rose by over 30 million last week, and Treasury Secretary Steven Mnuchin warned overnight that the U.S. unemployment could have already reached 25%, not the 14.7% recorded in Friday’s official employment release for April.
There is little in terms of important financial releases due Monday on the global agenda, but later this week we have the U.S. data on retail sales and Chinese figures on industrial production and retail sales.
Attention this week may well turn on the EU Commission’s proposal for the EU Recovery Fund, focusing on the size and funding of the funds given the political difficulties surrounding the EU response to the Covid-19 crisis.
“We remain doubtful that much of the stimulus will come from a European program as the size of the recovery fund mandated by the European Commission will continue to be limited,” analysts at ING said in a research note .
At the same time, European Central Bank officials spoke of the possibility of more stimulus, without being undermined by the recent German court, which questioned the legality of some of its monetary policies.
Late last week, the governor of the French central bank, Francois Villeroy de Galhau, made clear that the ECB is likely to increase the monetary stimulus soon, in light of the deteriorating outlook for inflation and the ECB’s “overall” commitment to its inflation mandate.
In remarks to the Finance Committee of the French National Assembly, he argued that “in the very name of our mandate, we will be able to move forward and we will probably have to move forward”.
ECB board member Isabel Schnabel echoed similar sentiments in an interview with Italian newspaper La Repubblica.