Today we received several very important fundamental reports from the European Union. Firstly, the inflation rate in France was 0.3%, which is lower than the expected 0.4%, showing economic activity has slowed down more than anticipated. The GDP growth rate from Germany also disappointed investors, coming in at -2.3%, when a decline of -2% was forecasted. The overall eurozone GDP estimate met the forecast of -3.8%.
Meanwhile, the European Union and the United Kingdom are approaching a Brexit negotiations deadline in June. Despite the pandemic, representatives of both parties have been talking about the future relationship between them after the transition period for the UK expires at the end of 2020.
But with half a year of talks almost over, the EU and the UK are nowhere near an agreement. According to officials involved in the talks, there are currently many disagreements between the two sides, and neither party is backing down. Chief negotiator Michel Barnier will speak later today and shed more light on the current Brexit situation.
When the June deadline arrives, there will be a chance to agree on extending the talks, but Boris Johnson so far has been adamantly opposed to that. Still, the EU has warned that if there is no comprehensive agreement ready by October, governments won’t have time to ratify it so that it is ready to come into effect from 2021. That means a hard Brexit could ensure, with the United Kingdom having no trade treaties with the EU member states at all.
Reports from the United States are also not stellar. Yesterday’s highly anticipated initial jobless claims report was worse than expected, with 2.9 million jobs lost against a prediction of 2.5 million. Today we are waiting for the retail sales report. If that also fails to meet the forecast, it would signify the US economy was affected worse than previously estimated.
Amid the disappointing economic results from all over the world, and the fears of a second wave of the coronavirus pandemic, safe haven assets are strengthening. Gold today surpassed $1,735, trading at multi-year highs. Silver is also doing well.
