Economic Data and Geopolitics Keep the EUR and Greenback in Focus

Earlier in the Day:

It was a relatively busy start to the day on the economic calendar this morning. The Aussie Dollar and Kiwi Dollar were in action in the early part of the day.

Following positive sentiment across the global financial markets on Tuesday, market attention returned to tensions between China and the U.S.

China markets had been closed since the start of May, which had limited the market reaction to the blame game.

Looking at the latest coronavirus numbers,

On Tuesday, the number of new coronavirus cases rose by 81,537 to 3,720,873. On Monday, the number of new cases had risen by 74,217. The daily increase was higher than Monday’s rise and a 75,118 increase on the previous Tuesday.

France, Germany, Italy, and Spain reported 4,993 new cases on Tuesday, which was up from 3,642 new cases on Monday. On the previous Tuesday, 6,060 new cases had been reported. Germany reported just 569 news cases, marking a 4^th consecutive day of sub-1,000.

From the U.S, the total number of cases rose by 25,189 to 1,235,456 on Tuesday. On Monday, the total number of cases had risen by 22,145. On Tuesday, 28^th April, the total new number of cases had risen by 25,258.

For the Kiwi Dollar

1^st quarter employment figures were in focus in the early part of the day.

• Employment increased by 0.70% in the 1^st quarter, leading to a rise in the unemployment rate from 4.0% to 4.2%. In the 4^th quarter, employment had remained unchanged, quarter-on-quarter.
• Economists had forecast a 0.3% decline in employment and an unemployment rate of 4.3%.

According to NZ Stats,

• There was a sharp rise in the number of jobseeker benefit claims at the end of March and early April. This suggests a marked increase in the unemployment rate in the June quarter.
• The underutilization rate increased from an 11-year low 10.0% to 10.4% in the 1^st quarter, while down by 11.3% year-on-year.
• Seasonally adjusted, the employment rate rose from 67.3% to 67.5% in the 1^st quarter, hovering close to its peak of 68.0%.

The Kiwi Dollar moved from $0.60626 to $0.60628 upon release of the figures. At the time of writing, the Kiwi Dollar was flat at $0.6052.

For the Aussie Dollar

Retail sales jumped by 8.5% in March, month-on-month, following a 0.5% rise in February. Economists had forecast an 8.2% surge.

According to the ABS,

• COVID-19 led to an unprecedented surge in demand for food (+24.1%), household goods (+9.1%), and other retailing (+16.6%).
• Social distancing led to a marked sales decline in cafes, restaurants, and takeaway food services (-22.9%).
• Discretionary spending in clothing, footwear, and personal accessory retailing (-22.6%), and department stores (-8.9%) were also weak.
• Records were broken in the month, with spending on food retailing seeing the largest rise on record. By contrast, the sales fall in cafes, restaurants, and takeaway food was the largest decline on record.

The Aussie Dollar moved from $0.64261 to $0.64307 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.03% to $0.6429.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.23% to ¥106.33 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar. Following Monday’s dire manufacturing PMI numbers, Italy and Spain’s April Services PMIs are in focus later this morning.

Finalized Service and Composite PMIs are also due out of France, Germany, and the Eurozone.

From Germany and the Eurozone, March factory orders and retail sales figures are due out but will likely have a muted impact on the EUR.

While we will expect the PMIs to be of influence, the continued easing of lockdown measures and fall in new cases remains EUR positive.

A V-Shaped economic recovery is not expected, however, which will continue to limit any upside for the EUR.

Expect market risk appetite to play a hand, however. Any chatter from Beijing or Washington will influence. There is also the issue of a COVID-19 stimulus package to consider, with EU member states needing to deliver.

At the time of writing, the EUR was down by 0.01% to $1.0839.

For the Pound

It’s a relatively quiet day ahead on the economic calendar. April construction PMI figures are due out later today.

The PMI is forecasted to tumble from 39.3 to 22.2 in April, which would pressure the Pound.

Outside of the numbers, however, there are trade talks with the U.S, Brexit negotiations, and lockdown measures to consider.

A trade agreement with the U.S would certainly remove a large degree of uncertainty that has plagued the Pound.

At the time of writing, the Pound was up by 0.02% to $1.2437.

Across the Pond

It’s a relatively quiet day ahead on the U.S economic calendar. April’s ADP employment change figures are due out later today.

While the markets are all too aware of the surge in jobless claims through April, the headline figure will likely be alarming.

Expect the headline figure to affect risk appetite later in the day.

Outside of the numbers, chatter from Beijing and Washington will continue to influence.

The Dollar Spot Index was up by 0.08% to 99.790 at the time of writing.

For the Loonie

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

A lack of stats will leave the Loonie in the hands of risk sentiment and the weekly EIA crude oil inventory numbers.

At the time of writing, the Loonie was down by 0.04% to C$1.4055 against the U.S Dollar.