Forex Major Currencies Outlook (Apr 13 – Apr 17)

USD 

Initial jobless claims for the week ending with April 3 came in at 6606k vs 5500k as expected. There was a small drop compared to prior week’s reading of 6867k, however the numbers are still much worse than expected and there is no sign of the data slowing down. Headline CPI in March fell to 1.5% y/y from 2.3% y/y the previous month on the back of slumping oil prices. Core CPI dropped to 2.1% y/y from 2.4% y/y which will be a cause for concern during normal times but now the reading is brushed off. 

Fed has announced new plan of $2.3 trillion in lending programs to support the economy. $600bn is intended for small and mid-sized businesses through Main Street Lending Program. Municipal Liquidity Facility will offer up to $500bn in lending to states and municipalities. Primary and secondary corporate debt facilities and TALF will be expanded using the remaining amount. 

This week we will have consumption, housing and industrial production data as well as initial jobless claims for week leading up to the Easter holiday. 

Important news for USD: 

Wednesday:

• Retail Sales
• Industrial Production

Thursday:

• Housing Starts
• Building Permits
• Initial Jobless Claims 

EUR 

The Emergency conference held by finance ministers of EU states failed to approve a €500bn aid package. The countries again divided between northern and southern countries over sharing the burden for the hardest hit countries. Italy and Spain pushed for the introduction of coronabonds that would help spread the burden among all of the countries while Germany and Netherlands are opposing it. This decision has to be unanimous in order to be implemented; a simple majority will not suffice. ECB has decided to accept Greek debt as collateral after it was excluded for almost 5 years. At their second meeting they managed to agree on around €540bn rescue package. Restriction on the deal is that funds have to be used for treating issues caused by coronavirus. 

This week we will have industrial production data and final March inflation data. 

Important news for EUR: 

Thursday:

• Industrial Production

Friday:

• CPI 

GBP 

News that prime minister Boris Johnson has been put into intensive care due to coronavirus lead to the weakening of pound at the start of the week. Foreign secretary Dominic Raab was named as interim leader of the government and due to his hard Brexit stances as well as fiscal conservatism the pound was pushed even lower. 

AUD 

RBA has left the cash rate unchanged at 0.25% as was expected after the multiple cuts preceding this meeting. They stated that if market conditions continue to improve “smaller and less frequent purchases of government bonds will be required”. The government has voted to subsidize the wages of 6 million workers for at least the next 6 months. Trade balance data for February showed a larger than expected surplus at AUD4.36bn. However, it was achieved on both falling exports (-4.7%) and falling imports (-4.3%). CPI from China for the month of March came in at 4.3% y/y while the food prices were up 18.3% y/y. PPI has continued its deflationary trend sinking even lower to -1.5% y/y due to shutdowns. 

This week we will have employment data from Australia and slew of March data from China including Q1 GDP, trade balance, consumption and industrial production. 

Important news for AUD: 

Tuesday:

• Trade Balance (China)

Thursday:

• Employment Change
• Unemployment Rate

Friday:

• GDP (China)
• Retail Sales (China)
• Industrial Production (China) 

NZD 

Business confidence for Q1 dropped to -70 from -21 the previous quarter. The report states that a net 67% of businesses expects a deterioration in general economic conditions while a net 11 percent reported weaker demand in their own business in the 1st quarter, but a net 13 percent expected weaker demand in the next quarter. RBNZ has increased their QE program to NZD33bn over the 12 months. GDT price index came in at 1.2% thus snapping a streak of four consecutive negative auctions thanks to the rise in whole milk prices. 

CAD 

March employment data from Canada missed already bleak expectations and came in at -1010k vs -500k as expected - the worst employment report ever, but that unwelcoming title can be overtaken already by April’s report since numbers are gathered up to March 21. The unemployment rate jumped to 7.8% from 5.6% the previous month while participation rate dropped to 63.5% from 65.5% the previous month. Due to the methodology connected with calculation of the unemployment rate it is feared that true rate could be higher, even going to 9%. Part-time employment fell by -536.7k while full-time employment plunged -474k. Those are some atrocious numbers. 

OPEC+ countries agreed to reduces output by 10-12 mln bpd in May and June. Oil traders were not impressed by this decision because cuts appear to be small, there is already oversupply and Mexico refused to participate in output cuts, but later on agreed on 100k bpd reduction. 

This week we will have BOC meeting that is expected to be a non-event since the rates have already been slashed to 0.25% and started QE program. 

Important news for CAD: 

Wednesday:

• BOC Interest Rate Decision
• BOC Rate Statement

Thursday:

• Manufacturing Sales 

JPY 

Household spending in February came in at -0.3% y/y vs -3.9% y/y the previous month, most likely due o stocking up of goods before the virus outbreak. Labour cash earnings beat expectations, coming in at 1% y/y but slowed down compared to 1.5% y/y the previous month. Core machinery orders came in better than expected at 2.3% m/m and -2.4% y/y. This is another data point indicating good pre-virus conditions which will be completely ignored. 

Prime minister Abe announced a state of emergency in seven prefectures adding that the government will withdraw the order as soon as it is clear that people's lives are no longer in danger or if the measures are no longer needed. The overall cost of the government fiscal stimulus is said to reach almost 20% of GDP with cash payments to households being primary focus. BOJ has cut economic outlook for all regions. 

This week we will have final February industrial production data. 

Important news for JPY: 

Friday:

• Industrial Production 

CHF 

Total sight deposits for the week ending with April 3 came in at CHF627.2bn vs CHF620.5bn the previous week. SNB is fighting hard to limit Swissy’s strength. The unemployment rate in March jumped to 2.8%.

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_{Please note that this analysis should not be used as investing advice as it is only an overview of the economic events influencing the markets. Please remember that MT4.VAR. and MT4.ECN. accounts have Market Execution. Please note how Execution works during high impact news and other times of low liquidity.}