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Bob Mason
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Earlier in the Day:

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

A pause in the risk-on rally led to the U.S Dollar finding support early on, resulting in a pullback in the commodity currencies.

Looking at the latest coronavirus numbers,

On Wednesday, the number of new coronavirus cases rose by 121,534 to 6,592,445. On Tuesday, the number of new cases had risen by 112,694. The daily increase was higher than Tuesday’s rise and 110,221 new cases from the previous Wednesday.

France, Germany, Italy, and Spain reported 1,401 new cases on Wednesday, which was up from 938 new cases on Tuesday. On the previous Wednesday, 1,892 new cases had been reported. Significantly, all 4 member states reported more than 300 cases each for 1st time in 3-days.

From the U.S, the total number of cases rose by 21,763 to 1,901,428 on Wednesday. On Tuesday, the total number of cases had risen by 21,208. On Wednesday 27th May, a total of 20,392 new cases had been reported.

For the Aussie Dollar

It was a busy morning for the Aussie Dollar, with April retail sales and trade data in focus.

In April, retail sales slumped by 17.7%, reversing an 8.5% rise from March. Economists had forecast a 17.9% tumble. This was revised up from a prelim 17.9%.

According to the ABS,

  • Cafes, restaurants, and takeaway food services reported a record 35.4% fall.
  • There was also a record fall in clothing, footwear, and personal accessory retailing (-53.6%).
  • Department stores retailing slid by 14.9%, with food retailing sliding by 17.4%.
  • Other retailing fell by 14.4%, while household goods retailing fell by just 0.1%.

The sizeable fall was attributed to lockdown measures to curb the spread of the coronavirus in April. The markets had anticipated dire numbers, largely muting the impact on the Aussie Dollar.

Australia’s trade surplus narrowed from A$10.602bn to $8.800bn in April. Economists had forecast a narrowing to A$7.500bn.

According to the ABS,

  • Goods and services credits fell A$4,756m (11%) to A$37,505m.
    • Non-rural goods exports fell by A$2,192m (8%), with non-monetary gold exports falling A$1,694m (47%). Services credits fell by A$924m (13%).
    • There was a A$39m (1%) increase in the exports of rural goods and a A$15m (79%) rise in the exports of goods under merchanting.
  • Goods and services debits fell A$3,111m (10%) to A$28,705m.
    • Intermediate and other merchandise goods imports fell A$507m (5%) and non-monetary gold by A$402m (40%). Services debits fell A$2,773m (42%).
    • There was a A$329m (4%) increase in the import of consumption goods and A$243m (4%) rise in capital goods.

The Aussie Dollar moved from $0.69065 to $0.68971 upon release of the statement. At the time of writing, the Aussie Dollar was down by 0.38% at $0.6895.

Elsewhere

At the time of writing, the Japanese Yen was flat at ¥108.90 against the U.S Dollar, while the Kiwi Dollar was down by 0.12% to $0.6414.

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The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. Eurozone retail sales figures for April are due out later this morning.

We are expecting quite dire numbers and very little influence on the EUR. Europe had been in lockdown mode in April, which should result in a marked fall in consumption, with non-essential businesses closed.

The main event of the day will be the ECB press conference this afternoon. With the ECB expected to hold policy unchanged, ECB President Lagarde’s outlook on the economy and policy will be key.

From elsewhere, any risk aversion would pin the EUR back on the day.

At the time of writing, the EUR was down by 0.13% to $1.1218.

For the Pound

It’s a relatively quiet day ahead on the economic calendar. May’s construction PMI is due out later today.

While we will expect some support from a partial recovery, Brexit and COVID-19 remain key areas of focus for the Pound.

Expect chatter across the news wires to influence.

At the time of writing, the Pound was down by 0.28% to $1.2540.

Across the Pond

It’s a relatively busy day ahead on the U.S economic calendar. Key stats include 1st quarter unit labor cost and nonfarm productivity figures, April trade data, and the all-important weekly jobless claims.

As the markets begin to consider tomorrow’s labor market stats, expect the jobless claims to have the greatest impact.

The Dollar Spot Index was up by 0.18% to 97.447 at the time of writing.

For the Loonie

It’s a quiet day ahead on the economic calendar. Economic data is limited to April trade data that will have little influence on the Loonie.

Expect chatter from OPEC Plus and market risk sentiment to be the key drivers on the day.

At the time of writing, the Loonie was down by 0.15% to C$1.3515 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

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