Coronavirus News and Sliding Crude Oil Prices To Test Risk Appetite

Earlier in the Day:

It was a busy start to the week on the economic calendar, with the Kiwi Dollar, the Japanese Yen and the PBoC in action.

Outside of the numbers, COVID-19 related news was also in focus early in the day.

Over the weekend, the total number of coronavirus cases across France, Germany, Italy, and Spain rose by 23,643 to 676,282. In the previous weekend, the total number of new cases had risen by 30,749.

In the U.S, the total number of cases increased by 55,102 to 764,303, taking the total number of cases to 2,407,294. Over the previous weekend, the U.S had reported 58,384 new cases.

The Key take away from the numbers was a decline across the 4 EU member states and the U.S. There was an increase in the total number of new cases globally, however, when compared with the previous weekend.

While U.S cases were down week-on-week, reports of some U.S governors wanting to extend the lockdown weighed on risk appetite early on. While the number of new cases was falling in some states, there were also reports of new hot spots emerging.

Oil prices were on the slide once more, pressuring the commodity currencies, as sentiment towards demand continued to weigh. At the time of writing, WTI had slumped by 14.94% to $15.54 a barrel.

For the Kiwi Dollar

1^st quarter inflation figures were in focus early in the Asian session. In the 1^st quarter, consumer prices rose by 0.8%, following a 0.5% rise in the 4^th quarter. Economists had forecast a 0.4% increase. The annual rate of inflation accelerated from 1.90% to 2.5% in the 1^st quarter, which was the highest since Q3 2011. Economists had forecast an annual inflation rate of 2.10%.

According to NZ Stats,

• An annual tobacco tax led to an 11% increase in cigarette and tobacco prices in the 1^st
• Rents also contributed, with rents rising by 1.2% in the quarter and by 3.7% for the year.
• It was noted, however, that the numbers did not fully reflect the effects of COVID-19.

The Kiwi Dollar moved from $0.60229 to $0.60331 upon release of the figures. At the time of writing, the Kiwi Dollar down by 0.31% to $0.6016.

For the Japanese Yen

Japan’s trade surplus narrowed from ¥1,108.8bn to ¥4.9bn in March. Economists had forecast a narrowing to ¥420bn.

According to figures released by the  Ministry of Finance,

• Exports tumbled by 11.7% in March following a 1% decline in February. Economists had forecast a 10.1% slide.
  • Exports to China fell by 8.7%, with exports to South Korea and Singapore sliding by 10.4% and by 33.7% respectively.
  • To the U.S, exports slid by 16.5%, with exports falling by 13.2% to Western Europe.
  • Exports to Germany fell by 12.6%, with exports to the UK tumbling by 23.5%.
• Imports fell by 5.0% in March, following a 13.9% tumble in February. Economists had forecast a 9.8% slide.
  • Imports from China fell by 4.5%, while imports from HK tumbled by 84.3%.
  • From the U.S, imports rose by 1.3%, while imports from the EU slumped by 12.4%.
  • From Germany, imports slid by 19.0%, with imports from the UK (-17.7%), France (-38.5%), and the Netherlands (-16.8%) also seeing large declines.

The Japanese Yen moved from ¥107.675 to ¥107.736 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.21% to ¥107.77 against the U.S Dollar.

Out of China

The PBoC is also scheduled to deliver its loan prime rates for April.

• The 1-year LPR is forecast to be cut 4.05% to 3.95%, with the PBoC expected to cut the 5-year LPR from 4.75% to 4.65%.

At the time of writing, the Aussie Dollar was down by 0.28% to $0.6348.

The Day Ahead:

For the EUR

Its a relatively quiet day ahead on the economic calendar. March wholesale inflation figures for Germany and February trade data for the Eurozone are due out.

Neither sets of numbers are likely to have an impact on the EUR, however. Deflationary pressures are expected and February trade data will not reflect the effects of COVID-19 on the Eurozone economy.

We will expect market sentiment towards lockdown measures and possible treatment for COVID-19 to influence, however.

At the time of writing, the EUR was down by 0.06% to $1.0868.

For the Pound

It’s a quiet day ahead on the economic calendar, with no material stats due out to provide the Pound with direction.

Risk appetite in the day will ultimately dictate the direction of the Pound. A continued rise in coronavirus cases in the UK may also test the Pound at the start of the day, however.

At the time of writing, the Pound was down by 0.11% to $1.2485.

Across the Pond

It’s also a particularly quiet day ahead on the U.S economic calendar, with no material stats due out to spook the markets.

The lack of stats will leave coronavirus numbers and chatter from Capitol Hill in focus.

More details on the planned easing of COVID-19 containment measures are going to be needed in the day ahead.

The Dollar Spot Index was up by 0.04% to 99.824 at the time of writing.

For the Loonie

It’s a relatively quiet day on the economic calendar, with February’s wholesale sales figures due out later today.

The numbers are unlikely to have a material impact on the Loonie, however, with February numbers dated.

Economic woes, however, coupled with a crude oil supply glut will continue to pressure the Loonie.

The Loonie was down by 0.49% to C$1.4069 against the U.S Dollar, at the time of writing. Sliding oil prices weighed early in the day.