Beijing has announced plans to restrict exports of rare-earth metals to the US in its latest retaliatory move. China produces 80–90 per cent of the world’s supply of this vital commodity used by some of the consumer tech giants such as Apple and in a vast array of products from smartphones and medication to missile systems.
The announcement caused stocks to fall, with the Dow Jones and the S&P 500 tumbling to four and two-month lows, respectively. The Dollar strengthened against its peers as a safe haven, with EUR/USD trading as low as $1.1123, just above its 2019 low of $1.1107. Sterling also bore the brunt, cable traded as low as $1.2617.
Meanwhile, Italian Deputy Prime Minister Matteo Salvini has turned up the heat between the EU and Italy. “I don’t govern a country on its knees”, he said in defiance to an indictment letter from European Commission President Jean-Claude Juncker, stating Italy was facing fines of €3.5 billion if it fails to tighten its belt. Juncker gave a 48-hour deadline to respond, which if highly likely to lapse tomorrow, 31 May.
Key data releases
The morning session is light on data as Germany, France and Switzerland are celebrating a national day today. However, this afternoon the focus will be on the US Gross Domestic Product release, which is expected to show a slight revision to the initial GDP estimate for the first quarter of 2019 down from 3.2 per cent to 3.1 per cent. Despite the downgrade, the US economy smashed 2 per cent growth expectations. If the release beats the 3.1 per cent estimate, we could expect substantial Dollar strength, while EUR/USD and GBP/USD may test new 2019 lows.
Europe stems tide of Euroscepticism
Data provided by