The last day of the month is always an atypical trading day in which the flows of the large investment funds that balance their portfolios produce movements that are not related to fundamental market news.
Only one economic figure has sparked investors' attention, US personal spending for April falling -13.6%, the most significant drop in the entire series for this figure, but in any case, it has had little effect on assets trading because of a deep drop was already expected due to lock-down. Investors are already discounting the wrong economic figures due to the direct impact of the crisis, but they anticipate a rapid recovery.
Throughout the session, the market has been waiting for President Trump's press conference to announce sanctions against China. Most movements have been transitional with few changes in the currency market before the speech and the stock markets swinging between profit and loss but with some bearish bias due to closing tactical positions over the weekend and as a precaution due to Trump's unpredictable speech.
Finally, the speech came, albeit an hour late and without the possibility of asking questions for the journalists.
He started with a very sour tone against China accusing them of breaching international treaties, spreading the virus, and taking Hong Kong against the agreement they signed with the United Kingdom. He did not speak of concrete measures against China, only some visa restrictions for Chinese citizens. He pointed to the possibility of investigating Chinese companies listed on the American stock market to ban them.
But he did not mention at any time the trade agreement that both parties continue to negotiate. In the end, as some media say, there have been more barking than biting.
The reaction of the stock markets has been positive in the absence of concrete sanction measures.
With the only exception of USA30, the North American indices returned to positive territory.
EUR/USD recovered from 1.1080 after hitting the resistance level of 1.1140 in the morning. The Dollar weakened again after strengthening before Trump's speech. The downside movement on the day of EUR/USD may be considered as corrective; the pair still maintains its bullish momentum, which would accelerate it above 1.1140.
GOLD has resumed its uptrend, although it has not managed to overcome the resistance of 1735. It is close to these levels, and if the downward trend of the Dollar continues, it could help the precious metal overcome these levels and head towards its next target at $1747.