The economic calendar puts the Pound front and center, though there is the rising concern of a 2nd wave of the COVID-19 pandemic to consider...
It was a busy day on the economic calendar this morning. The Aussie Dollar, the Kiwi Dollar, and the Japanese Yen were in focus in the early part of the day.
Away from the calendar, COVID-19 updates also provided direction early on. Concerns over a possible 2nd wave of new COVID-19 cases continued to test risk appetite early in the day.
Looking at the latest coronavirus numbers,
On Tuesday, the number of new coronavirus cases rose by 81,022 to 4,337,562. On Monday, the number of new cases had risen by 76,701. The daily increase was higher than Monday’s rise, while lower than an 81,537 increase on the previous Tuesday.
France, Germany, Italy, and Spain reported 4,176 new cases on Tuesday, which was down from 5.374 new cases on Monday. On the previous Tuesday, 4,993 new cases had been reported.
From the U.S, the total number of cases rose by 22,740 to 1,408,574 on Tuesday. On Monday, the total number of cases had risen by 18.196. On Tuesday, 5th May, the total new number of cases had risen by 25,189.
The current account surplus narrowed from ¥3.169tn to ¥1.971tn in March. Economists had forecast a narrowing to ¥2.211tn.
The Japanese Yen moved from ¥107.156 to ¥1.7.190 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.08% to ¥107.23 against the U.S Dollar.
Consumer sentiment improved in May, with the Westpac Consumer Sentiment Index rising by 16.4% to 88.1. In April, the index had fallen by 17.7% to 75.6. Economists had forecast a 14% fall to 65.0.
According to the latest Westpac Report,
The Aussie Dollar moved from $0.64648 to $0.64791 upon release of the figures that preceded 1st quarter wage growth figures.
In the 1st quarter, wages grew by 0.5%, following on from a 0.5% rise in the 4th quarter. Economists had forecast a 0.5% rise.
According to the ABS, wage growth slowed to 2.1% over the year.
The Aussie Dollar moved from $0.64651 to $0.64614 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.15% to $0.6461.
The RBNZ was in action in the earlier part of the day and held cash rates unchanged at 0.25%, which was in line with market expectations.
Salient points from the RBNZ Rate Statement included:
The Kiwi Dollar moved from $0.60833 to $0.60461 upon release of the rate statement and monetary policy statement. At the time of writing, the Kiwi Dollar was down by 0.69% to $0.6036, with the RBNZ press conference up next.
It’s a relatively quiet day ahead on the economic calendar. March industrial production figures for the Eurozone are due out later today.
Following the alarming numbers from Germany last week, the markets aren’t expecting anything but a sharp decline.
Expect the figures to have a muted impact on the EUR.
Through the middle of the week, the market focus will remain on COVID-19 updates. A continued rise in new cases across Asia would be EUR negative.
At the time of writing, the EUR was up by 0.05% to $1.0853.
It’s a particularly busy day ahead on the economic calendar. In the early part of the day, April retail sales figures were in focus.
The BRC Retail Sales Monitor rose by 5.7%, year-on-year, following a 3.5% decline in March, supported by online retailers. The headline figure excludes the effect of temporary store closures.
Online non-food product sales jumped by 57.9%. In stark contrast, total retail sales plunged by 19.1% as a result of the April lockdown. This was the largest decline since records began.
Later in the day, March Manufacturing production and 1st quarter GDP numbers are due out later today.
While the markets are expecting some dire numbers, the Pound will likely come under pressure in response to the numbers.
Industrial production and trade data, also due out later today, will likely have a muted impact on the Pound.
Away from the stats, expect updates on Brexit negotiations and COVID-19 plans to also influence on the day.
At the time of writing, the Pound was up by 0.08% to $1.2270.
It’s another relatively quiet day ahead on the U.S economic calendar.
Key stats include April wholesale inflation figures. The numbers are unlikely to have a material influence, however. Falling input and output prices are likely to weigh heavily on headline figures amidst the April lockdown.
Outside of the numbers, COVID-19 news and chatter from the U.S administration will also need monitoring.
The Dollar Spot Index was up by 0.07% to 99.999 at the time of writing.
It’s a quiet day on the economic calendar, with no material stats to provide the Loonie with direction.
Expect OPEC’s monthly report and the weekly EIA inventory numbers from the U.S to influence. While the markets are expecting the talk of production cuts to continue, inventory builds will need to slow.
There is also the issue of a possible 2nd wave of the coronavirus that could weigh heavily on the demand outlook.
At the time of writing, the Loonie was up by 0.14% to C$1.4059 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.