It's a busy day ahead on the economic calendar. There is also geopolitics to consider with over the course of the day.
It was a busier day on the economic calendar this morning. The Aussie Dollar and Kiwi Dollar were in action early on, with the Japanese Yen in action later this morning.
Away from the calendar, downside risks remained, however. Key drivers include tensions between the U.S and China and the possibility of a 2nd wave of the coronavirus pandemic.
On the positive front, though, remained the continued easing of lockdown measures coming in the wake of a flurry of central bank and government fiscal support maneuvers.
Following FED Chair Powell’s comments over the weekend, expect the markets to also remain sensitive to any spikes in new coronavirus cases. The key to an ongoing easing of lockdown measures is a continued downward trend in the number of new cases…
Looking at the latest coronavirus numbers,
On Monday, the number of new coronavirus cases rose by 82,564 to 4,888,188. On Sunday, the number of new cases had risen by 83,321. The daily increase was lower than Sunday’s rise, while higher than 76,701 new cases on the previous Monday.
France, Germany, Italy, and Spain reported 1,916 new cases on Monday, which was down from 2,500 new cases on Sunday. On the previous Monday, there had been 5,374 new cases.
From the U.S, the total number of cases rose by 22,231 to 1,549,895 on Monday. On Sunday, the total number of cases had risen by 19,891 On Monday, 11th May, a total of 18,196 new cases had been reported.
Wholesale inflation figures for the 1st quarter had little influence in the early hours. Deflationary pressures are likely to have picked up in the 2nd quarter due to the global lockdown.
According to NZ Stats:
The Producer Price Input Index fell by 0.3% in the 1st quarter, quarter-on-quarter, reversing a 0.1% rise in the 4th quarter.
The Kiwi Dollar moved from $0.60443 to $0.60441 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.03% to $0.6039.
The RBA meeting minutes were the main area of focus in the early part of the day.
Salient points from the minutes included:
On the economic outlook:
On the policy outlook:
The Aussie Dollar moved from $0.65319 to $0.65236 upon release of the minutes. At the time of writing, the Aussie Dollar was up by 0.03% to $0.6526.
Finalized industrial production figures are due out later this morning. We don’t expect the numbers to have a material impact on the Yen, however.
Key near-term remains an easing of lockdown measures and a pickup in global trade activity as lockdown measures ease elsewhere.
At the time of writing, the Japanese Yen was down by 0.08% to ¥107.43 against the U.S Dollar.
It’s a busier day ahead on the economic calendar. Germany and the Eurozone’s ZEW economic sentiment figures for May are due out in the early afternoon.
We saw sentiment improve in April and will likely improve further in May. It’s not all bells and whistles, however, with both indexes likely to remain in the deep red.
Outside of the numbers, EU Finance Ministers are holding a virtual meeting later today. The markets will be expecting more from member states to combat the economic meltdown.
Failure to deliver will raise more concerns over the EU Project and economic recovery. The good news going into today was a shift in stance by German Chancellor Merkel on Monday. A proposal by Macron and Merkel for a European recovery fund to support member states most affected by COVID-19 gave the EUR a boost. Other EU member states will need to agree to this and, while Merkel may have changed tact, other Northern EU member states may be less obliging…
At the time of writing, the EUR was down by 0.03% to $1.0910.
It’s a busy day ahead on the economic calendar. Key stats include April’s Claimant Count Change and March’s unemployment rate.
Average earnings and rolling 3 month-on 3-month employment change figures are also due out but will have less influence on the day.
With the UK in lockdown throughout April and through the early part of May, the claimant count numbers are likely to weigh on the Pound.
Outside of the numbers, expect updates on Brexit and the government’s plans to ease lockdown measures to also influence.
On Monday, the Pound found strong support after Friday’s sell-off. A breakout from current levels may be another story, however, with so much downside risk.
At the time of writing, the Pound was up by 0.09% to $1.2205.
It’s a relatively busy day ahead on the U.S economic calendar. Key stats include April’s building permits and housing starts.
Barring particularly dire numbers, the markets will likely brush aside the figures. Housing sector activity began to pick up in the 2nd half of April. Constructors had reined in plans to build amidst the COVID-19 pandemic, however. The outlook will be dependent upon labor market conditions in the coming months.
Central bank chatter will also be in focus, with FED Chair Powell scheduled to deliver testimony later today. There may be few surprises, however, following last week’s speech.
Away from the calendar, expect chatter from Capitol Hill to also influence market risk sentiment on the day.
The Dollar Spot Index was down by 0.03% to 99.634 at the time of writing.
It’s another quiet day on the economic calendar, with no economic data to provide the Loonie with direction.
The lack of stats will continue to leave the Loonie in the hands of market risk sentiment and crude oil prices on the day.
At the time of writing, the Loonie was down by 0.08% to C$1.3948 against the U.S Dollar.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.