Foreign Exchange Market Update

June 3, 2020

U.S. (US): Trump Administration Bar Chinese Passenger Carriers From Flying To US

President Trump’s administration said on Wednesday it will bar Chinese passenger carriers from flying to the US starting on June 16 as it pressures Beijing to allow US air carriers to resume flights. This move penalizes China after Beijing failed to comply with an existing agreement on flights between the world’s two largest economies. The order applies to Air China, China Eastern Airlines Corp, China Southern Airlines Co, and Hainan Airlines Holding Co. Delta Air Lines and United Airlines have asked to resume flights to China this month, even as Chinese carriers have continued US flights during the pandemic. A formal notice from the Transportation Department said China remains unable to say when it will revise its rules to allow US carriers to reinstate scheduled passenger flights. Trump administration on May 22 accused China’s government of making it impossible for US airlines to resume service to China and ordered four Chinese carriers to file flight schedules with the US government. The Chinese carriers are flying no more than one scheduled flight a week but also have flown a significant number of additional charter flights, often to help Chinese students return home. The Trump administration is also cracking down on Chinese passenger airline charter flights and will warn carriers not to expect approvals. On Jan. 31, the U.S. government barred from entry most non-U.S. citizens who had been in China within the previous 14 days due to the coronavirus crisis but did not impose any restrictions on Chinese flights. China’s air authority in late March said Chinese airlines could maintain just one weekly passenger flight on one route to any given country and that carriers could fly no more than the number of flights they were flying on March 12, according to the U.S. order. 06/02/2020 – 03:47AM (RTTNews)

Australia: GDP Contracts 0.3% in Q1

Australian dollar traded at 0.6943 U.S. cents at 9:00 am PST. 

Australia's GDP dropped a seasonally adjusted 0.3% in Q1. On a yearly basis, GDP expanded 1.4% - matching expectations. The GDP deflator was up 1.1% on quarter after sinking 1.2% in the three months prior. GDP final consumption was down 0.4%. The terms of trade rose 2.9%, while the household saving ratio increased to 5.5%. 06/02/2020 - 11:52PM (RTTNews)

European Union (EU): Unemployment Rises Moderately In April Amid Covid-19

Euro traded 1.1246 at against USD at 9:00 am PST. 

EU jobless rate rose to a three-month high of 7.3%, but this was below economists' forecast. The number of unemployed increased to 11.919 million in April. The unemployment rate among EU youth aged below 25 rose to 15.8%. Massive filings for short-time work schemes across EU have subdued the increase in unemployment. As the recovery is likely going to last for quite some time, unemployment is set to rise significantly although short-time work will help output to recover more quickly once demand returns. Meanwhile, Italy's jobless rate decreased to the lowest level in more than twelve years, the jobless rate fell to 6.3%. The number of jobseekers decreased to 1.543 million in April. German unemployment rose to 2.875 million in May. The jobless rate climbed to 6.3% in May from 5.8% in April. The labor market remains under a lot of pressure due to the coronavirus. 06/03/2020 – 05:56AM (RTTNews)

Switzerland: Swiss GDP Contracts More Than Expected In Q1

Swiss Franc traded at 0.9611 against USD at 9:00 am PST. 

GDP fell 2.6% sequentially, reversing a 0.3% rise in the 2019 Q4. On a yearly basis, the economy shrank 1.3%. Since shops were closed from March 17, purchases of furniture and clothing dropped sharply, as well as spending on mobility, leisure and health, private consumption declined 3.5% sequentially in Q1. Investment in construction dropped 0.4% and investment in equipment was down 4.0%. The only domestic demand component to underpin the economy was government consumption, which gained 0.7%. Overall, final GDP demand fell 2.7%, the biggest decline in recent decades. Exports of goods rose 3.4%, while that of services fell 4.4%. At the same time, imports of goods decreased 1.1% and imports of services fell 1.2%. 06/03/2020 - 01:59AM (RTTNews)

United Kingdom (UK): PM Johnson Tells China: We'll Not Walk Away From Hong Kong 

British Pound traded at 1.2596 against USD at 9:00 am PST. 

UK will not walk away from the people of Hong Kong if China imposes a national security law that would conflict with its international obligations under a 1984 accord. UK has urged China to step back from the brink over the national security legislation for Hong Kong that it says risks destroying one of the jewels of Asia’s economy while ruining the reputation of China. PM Johnson wrote in the Times of London newspaper, “Hong Kong succeeds because its people are free, if China proceeds, this would be in direct conflict with its obligations under the joint declaration, a legally binding treaty registered with the United Nations. Many people in Hong Kong fear that their way of life - which China pledged to uphold - is under threat,” Johnson added. China’s parliament approved last week a decision to create laws for Hong Kong to curb sedition, secession, terrorism and foreign interference. Mainland security and intelligence agents may, for the first time, be stationed in the city. “If China proceeds to justify their fears, then Britain could not in good conscience shrug our shoulders and walk away; instead we will honor our obligations and provide an alternative,” Johnson said. China said its decisions on national security in Hong Kong were its own affair and that UK’s link to the territory stemmed from aggressive colonization and unequal treaties. PM Johnson repeated UK’s pledge to give British National Overseas passport-holders in Hong Kong a path to UK citizenship, allowing them to settle in the UK if they chose to do so. Hong Kong activists plan to rally to mark the June 4, 1989 anniversary of Chinese troops firing on pro-democracy student demonstrators in and around Beijing’s Tiananmen Square, even though for the first time, an annual vigil for the anniversary has been cancelled over concerns about coronavirus contagion. 06/02/2020 – 07:13PM (RTTNews)