GENEVA — US equities rebounded; the Dow (+1.62%) and the S&P500 (+1.15%) gained on Thursday, as bank stocks rallied 2.64% as the Federal Reserve (Fed) Chair Jerome Powell talked down the possibility of negative rates for the moment. Nasdaq advanced 0.91%. But gains in US futures remained limited in Asia, on the back of rising tensions between Washington and Beijing amid Donald Trump said he doesn't want to talk to Xi Jinping for now. The blame game continues gaining momentum worrying that the frictions between the two countries could take another toll on the global trade. And a renewed US-China tension is the last thing the world needs right now. Especially provided that China probably has little response, and remedy, to Trump's accusation that they invented the virus on purpose. We still believe that Beijing will try bettering the relationship and will refrain from adding gas to fire. Data-wise, China has some good news. The slump in industrial production fell to 4.9% in April from -8.4% printed a month earlier, bringing the production on yearly basis to 3.9%, better than 1.5% penciled in by analysts. The decline in retail sales remained slightly stronger than analyst expectations, but overall, today's data confirmed a rapid recovery in Chinese macro-metrics, giving morose investors hope that life after coronavirus may not be as dull as they fear. However, the Chinese figures certainly don't reflect how the recovery will be in the rest of the world. Recovery outside China will likely remain dull and at risk of a second contagion wave, which could further hurt businesses and public finances. Due Friday, the US retail sales may confirm a 12% m-o-m slump in April, versus — 8.4% recorded a month earlier. Soft US data should translate into stronger safety flows and a firmer US dollar. But oil traders are hanging on to the hope that the slump in oil demand will be less than the IEA's previous forecast on prospects of increased mobility in Europe and in the US. And key oil producers continue trimming their sales to reduce the gap between the record fall in oil demand and the all-time high production worldwide. Latest news suggest that Saudi's Aramco is now selling to key buyers only. Prospects of a softer decline in oil demand and waning supply continues pushing oil prices higher. WTI crude tests the $28 a barrel, as Brent crude fights back the $32 resistance. But mounting anxiety regarding the pace of normalization and rising US-China tensions could cap the WTI's upside potential before the $30 mark. Activity in FTSE futures (+1.01%) hint at a positive open in London; energy stocks could surf on the positive oil wave before the weekly closing bell. In the foreign exchange markets, the US dollar index consolidates above the 100 mark on firm safe haven demand. The US treasury yields retreat as investors continue piling into less risky US debt, despite the uptick in equities — a proof that the risk appetite remains brittle. The EURUSD extended losses to 1.0775 on Thursday and remained offered near the 1.08 mark in Asia. The strong US dollar and uncertainties regarding the European Central Bank's (ECB) firepower weigh on the euro demand. Today, the Eurogroup meeting will lean on the progress over the second amendment adopted on May 8, 2020 to extend the scope of the state aid temporary framework, where countries will be given access to a credit line to finance their coronavirus-ballooned deficit. But the amount of lending remains quite limited, to maximum 2% of the member states' GDP. So even a good progress on the fiscal leg may not replace the ECB support, if the bank finds its intervention capacity paralyzed by the German opposition. Hence, the prospects of scarce fiscal and monetary support could further weigh on the European assets and the euro. Across the Channel, the pound bounced back to the 1.22 mark after having tested the April support of 1.2170 on Thursday. The sterling outlook remains negative as the latest round of Brexit negotiations this week didn't show any signs of progress in key areas. But the clock is ticking louder to the critical June 2 deadline and the chances of seeing a deal remain slim. Therefore, the increased pricing of a no-deal Brexit should further weigh on the pound and encourage a further retreat toward the 1.20 level, and possibly below against the greenback. — the writer is senior analyst at Swissquote Bank