The Bank of England and U.S Weekly Jobless Claims Put the Pound and Dollar in Focus

Earlier in the Day:

It was a busy start to the day on the economic calendar this morning. The Aussie Dollar and Kiwi Dollar were in action once more in the early part of the day. Economic data out of China also influenced early on.

Looking at the latest coronavirus numbers,

On Wednesday, the number of new coronavirus cases rose by 87,960 to 3,808,833. On Tuesday, the number of new cases had risen by 81,537. The daily increase was higher than Tuesday’s rise and a 77,918 increase on the previous Wednesday.

France, Germany, Italy, and Spain reported 9,651 new cases on Wednesday, which was up from 4,993 new cases on Tuesday. On the previous Wednesday, 8,651 new cases had been reported. All 4 member states saw a rise in new cases, with France and Spain reporting the highest increases on the day.

From the U.S, the total number of cases rose by 20,715 to 1,256,171 on Wednesday. On Tuesday, the total number of cases had risen by 25,189. On Wednesday, 29^th April, the total new number of cases had risen by 27,752.

For the Kiwi Dollar

Inflation expectations for 2-years out slumped in the 2^nd quarter from 1.93% to 1.24%, reversing a rise from 1.80% to 1.93% in the 1^st quarter. Inflation expectations had stood at 2.01% back in the June quarter of 2019 and the June quarter of 2018.

According to the RBNZ’s survey of expectations,

Inflation expectations for 1-year out tumbled from 1.88% to 0.74%, reversing a rise from 1.66% to 1.88% in the 1^st quarter.

The Kiwi Dollar moved from $0.60181 to $0.60220 upon release of the figures. At the time of writing, the Kiwi Dollar up by 0.23% to $0.6022.

For the Aussie Dollar

Trade data was in focus in the early part of the day. In March, Australia’s trade surplus widened from A$4.361bn to A$10.602bn. Economists had forecast a widening to A$6,800bn.

According to the ABS,

• Goods and services credits surged A$5,558m (15%) to A$42,417m.
  • Non-rural goods exports rose A$3,40m (15%), with non-monetary gold rising A$2,474m and rural goods A$271m (7%).
  • Net exports of goods under merchanting rose A$1m (6%), while services credits slid by A$727m (9%).
• Goods and services debits fell A$1,178m (4%) to A$31,815m.
  • Imports of capital goods fell A$194m (3%), with services debits tumbling A$1,492m (19%).
  • Imports of non-monetary gold surged A$466m (85%).
  • There were also increases in the imports of intermediate and other merchandise goods (A$31m) and consumption goods (A$10m).

The Aussie Dollar moved from $0.64027 to $0.64093 upon release of the figures, which preceded stats out of China. At the time of writing, the Aussie Dollar was up by 0.34% to $0.6422.

Out of China

April trade figures and Service PMI numbers were also in focus in the early part of the day.

In April, the Caixin Services PMI rose from 43.0 to 44.4. Economists had forecast an increase to 47.7.

According to the Markit Survey,

• Firms reported further falls in business activity and new work in April, though at a slower pace of decline since February.
• The COVID-19 pandemic remained a key driver, leading to new export sales falling at the 2^nd fastest pace on record.
• Companies trimmed payrolls as a result of falling sales.

The Aussie Dollar moved from $0.64093 to $0.64048 upon release of the figures.

In April, China’s U.S Dollar trade surplus widened from US$19.93bn to US$45.34bn. Economists had forecast a narrowing to US$6.35bn.

• Exports rose by 3.5%, following a 6.6% decline in March. Economists had a forecasted 15.7% slide.
• Imports slumped by 14.2%, following a 1% fall in March. Economists had forecast an 11.2% tumble.

The Aussie Dollar moved from $0.64141 to $0.64221 upon release of the figures.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.08% to ¥106.20 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. Following another string of dire numbers from Wednesday, French nonfarm payroll figures for the 1^st quarter are due out.

A particularly dire fall in nonfarm payrolls would likely add further pressure to the EUR. 2^nd quarter numbers, however, are more likely to reflect the impact of the lockdown.

Away from the numbers, expect market risk sentiment to also influence as the EUR comes under renewed pressure. The latest set of stats suggests that the Eurozone’s economic woes are far worse than initially anticipated. That puts even more focus on EU member states and their inability to deliver a more meaningful stimulus package…

Dire numbers and the German court ruling on the legality of the ECB’s bond-buying program may be tough the shake off…The markets are going to need some clarity on what’s next…

At the time of writing, the EUR was up by 0.07% to $1.0803.

For the Pound

It’s a busy day ahead on the economic calendar. While economic data is limited to house price figures, the BoE is scheduled to deliver its May monetary policy decision.

While the markets are expecting interest rates to be left unchanged, the vote count and forward guidance will be key.

Away from the economic calendar, the latest COVID-19 numbers and updates from EU – UK negotiations are negatives for the Pound.

At the time of writing, the Pound was down by 0.20% to $1.2325.

Across the Pond

It’s a relatively quiet day ahead on the U.S economic calendar. The weekly jobless claims figures are due out along with 1^st quarter unit labor cost and nonfarm productivity figures.

Expect the weekly jobless claims figures to have the greatest influence on risk appetite on the day. The markets will be looking for a marked decline in weekly claims…

Away from the stats, any chatter from Beijing or Washington will also need monitoring on the day.

The Dollar Spot Index was up by 0.05% to 100.139 at the time of writing.

For the Loonie

It’s a relatively quiet day on the economic calendar, with Ivey PMI numbers for April due out later today.

Expect the April figures to influence, with forecasts pointing to a marked slowdown in the pace of contraction.

Outside of the numbers, however, expect market risk sentiment and crude oil prices to remain a key driver.

At the time of writing, the Loonie was up by 0.12% to C$1.4129 against the U.S Dollar.