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Bob Mason
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On the Macro

It’s a busy week ahead on the economic calendar, with 60 stats in focus in the week ending 15th May. In the week prior, 61 stats had been in focus.

For the Dollar:

It’s another relatively busy week ahead for the greenback.

It’s a quiet first half of the week, however, with economic data limited to April housing sector numbers.

The markets are now looking for a May pickup in economic activity. We can, therefore, expect building permits and housing start numbers to have a muted impact on risk sentiment.

Mortgage applications have been on the rise since mid-April, which is positive.

Economic data on Thursday will garner plenty of attention, however.

May’s Philly FED Manufacturing Index, prelim private sector PMIs and weekly jobless claims figures will be of particular interest.

May numbers will give the markets an idea of what impact, if any, the initial easing of lockdown measures have had… May’s service sector PMI will likely be the key driver alongside the weekly jobless claims figures.

With no material stats due out on Friday, Thursday is the main event for the Greenback.

On the monetary policy front, the FOMC meeting minutes on Wednesday will also influence. FED Chair Powell had weighed on risk appetite last week. The minute will likely deliver a similar theme.

Outside of the numbers, expect COVID-19 updates and any further increased tension between the U.S and China to also influence risk sentiment and Dollar demand…

The Dollar Spot Index ended the week up by 0.67% to 100.402.

For the EUR:

It’s a busy week ahead on the economic data front.

In the 1st half of the week, May ZEW Economic Sentiment figures for Germany and the Eurozone are due out.

Will there be any pickup in sentiment or a reversal? Economists and Analysts seemed a little over-optimistic in the April report…

The markets will then need to look ahead to consumer confidence figures on Wednesday and May’s prelim private sector PMIs on Friday.

There will need to be a marked slowdown in the pace of contraction across the private sector to deliver any major upside for the EUR…

Germany and the Eurozone’s numbers will have the greatest influence on the day.

Outside of the numbers, EU Finance ministers are due to meet virtually in the early part of the week. Progress in delivering a sizeable COVID-19 stimulus package would be a boost…

The EUR/USD ended the week down by 0.18% to $1.0820.

For the Pound:

It’s another particularly busy week ahead on the economic calendar.

In the 1st half of the week, employment and inflation figures are due out on Tuesday and Wednesday.

Expect April’s claimant count and the annual rate of inflation to have the greatest impact on the Pound.

The markets will then need to wait for May prelim private sector PMIs and April retail sales figures on Thursday and Friday.

Expect the Pound to be sensitive to the numbers in the week ahead.

Outside of the numbers, Brexit chatter and COVID-19 updates will also be key drivers in the week.

The GBP/USD ended the week down by 2.37% to $1.2116.

For the Loonie:

It’s another relatively quiet week ahead on the economic calendar.

April inflation figures on Wednesday and March retail sales figures on Friday are the key drivers.

Neither set of numbers will have a material impact on the Loonie, however. Retail sales were likely to be on the weaker side and inflationary pressures were likely non-existent in April.

Expect market risk sentiment and the direction of crude oil prices to be key in the week ahead.

The Loonie ended the week down by 1.31% to C$1.4109 against the U.S Dollar.

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Out of Asia

For the Aussie Dollar:

It’s a particularly quiet week ahead.

There are no material stats due out, leaving the Aussie in the hands of commodity prices in the week.

On the monetary policy front, the RBA meeting minutes will garner some interest on Tuesday. Any suggestions of a further need for support would add further pressure on the Aussie Dollar.

Over the week, the market focus will be on the COVID-19 numbers. A continued easing of lockdown measures would be Aussie Dollar positive. Tensions between the U.S and China, however, would likely overshadow any positive sentiment, however.

The Aussie Dollar ended the week down by 1.82% to $0.6413.

For the Kiwi Dollar:

It’s a relatively quiet week ahead on the economic data front.  Key stats include 1st quarter wholesale inflation figures on Tuesday and retail sales figures on Friday.

Expect the 1st quarter numbers to have a limited impact on the Kiwi Dollar in the week.

Following the RBNZ policy decision last week, much will depend on the easing of lockdown measures. Not just in New Zealand but also across key trading partners…

A rise in tension between the U.S and China, however, would offset the effects of easing lockdown measures.

The Kiwi Dollar ended the week down by 3.28% to $0.5935.

For the Japanese Yen:

It’s a busy week ahead on the economic data front.

1st quarter GDP numbers set the tone on Monday, ahead of March industrial production figures on Tuesday.

The focus will then shift to April trade data on Thursday.

With the BoJ having made its move, the GDP and trade figures will likely have limited influence.

The markets will get a sense of just how bad things were, however.

Outside of the numbers, the Yen could find support should there be any jump in new COVID-19 cases in the U.S.

With the Japanese government removing emergency measures, the Yen could find support, particularly with troubles brewing between the U.S and China.

The Japanese Yen ended the week down by 0.38% to ¥107.06 against the U.S Dollar.

Out of China

It’s a quiet week ahead on the economic data front, with no material data due out in the week.

The market focus will remain on COVID-19 news and any rise in tension with the U.S…

On the monetary policy front, the PBoC is expected to leave loan prime rates unchanged on Wednesday. Chatter from Beijing of support would be needed, however, to mute the effects of a hold.

The Chinese Yuan ended the week down by 0.39% to CNY7.1019 against the U.S Dollar.

Geo-Politics

UK Politics:

Brexit, U.S – UK trade talks and lockdown measures are the key areas of focus in the week ahead.

Last week, we saw the Pound take a hit. Not only were government plans to ease lockdown measures disappointing, but Brexit news also weighed.

The EU’s plans to take the UK to court over its failure to deliver freedom of movement was another negative.

A lack of progress and a clear breakdown in relations doesn’t bode well for a trade agreement…

From the weekend, there was nothing positive for the Pound to find support from.

U.S Politics:

Rising tensions between the U.S, stemming from the U.S government’s plans to block chip deliveries to Huawei points to choppy waters ahead.

Trump appears to have jumped the gun and thrown the likes of Apple Inc. under the bus.

Corporate America will have some issues with the latest attack that would not only push production out of China but eat into a sizeable market in terms of revenue.

Another round of stimulus may not be enough to offset the likely effect of another U.S – China trade war.

The Coronavirus:

Easing measures will continue in the week and Trump has continued to state that easing measures will continue at all costs.

We’ve yet to see a marked increase in the number of COVID-19 numbers across the U.S, though concerns will linger over what lies ahead.

From the market’s perspective, there are 3 key considerations that remain:

  1. Progress is made with COVID-19 treatment drugs.
  2. The downward trend in new coronavirus cases continues.
  • Governments continue to progress with the easing of lockdown measures.

All of this will need to translate into a marked decline in jobless claims and a pickup in consumer confidence and consumption… We’ve yet to see any of this…

At the time of writing, the total number of coronavirus cases stood at 4,722,233, with the U.S reporting 1,507,773 cases to-date.

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