Trading on the currency market and on equity markets had a rather volatile course in recent days. Positive information on the economic situation was overshadowed by the development of the pandemic in Asia, and yesterday - the announcement of a tax increase on capital gains in the US, which obviously did not please Wall Street.
The ECB meeting did not hit the common currency. The EUR/USD exchange rate remained above 1.20. The monetary authorities will continue to pursue an extremely mild policy. While this contrasts sharply with, for example, the Bank of Canada starting to cut off the monetary stimulus, nothing else could be expected when the health situation remains difficult and economic activity is shackled by restrictions. This is definitely not yet the time to debate abandoning crisis policies.
Another encouraging news from economies
Good sentiment and an optimistic outlook on the future are confirmed by the economic barometers - PMI indexes. After a surprising rebound in the previous month, the eurozone services PMI continued its upward trend. Moreover, it returned above the 50-point barrier, which separates its regression from growth, for the first time since last August and took on the third-highest value since the beginning of the coronavirus pandemic.
Good industrial conditions are a global phenomenon. The fact that the sector is red-hot and that the issue is not new orders, but the availability of components for production was also confirmed in Friday's morning readings. The index rose for the tenth consecutive month and recorded its highest value ever. 66.3 points are truly impressive, especially when compared to the bottom noted precisely a year ago, at 33.4 points.
Moreover, positive information is also coming from the US labour market. Last week's drop in the number of newly registered unemployed below 600k was not a one-off. Thursday's data suggest further improvement. The number of new jobless claims is the lowest since the pandemic outbreak, which makes the expectations for an increase in the number of non-farm payrolls in the US, exceeding one million in April, very realistic. The spread of the good news to more economies should push capital away from the dollar toward those currencies whose home countries at any given time will have the most rapid vaccination progress behind them and the best chance of rapidly unfreezing the economy. In Q1, it was the pound. Now it is the euro.