Forex Major Currencies Outlook (Apr 20 – Apr 24)

USD 

Retail sales for the month of March came in at -8.7% m/m vs -8% m/m as expected. Control group came in at 1.7% m/m vs -2% m/m as expected. The biggest drop was in clothing stores and restaurants while food and beverage stores as well as pharmacies were up. The stockpiling of food and drugs at the beginning of the month was not enough to improve the reading above the expected number but it did manage to soften the drop. If we exclude the positive impact of grocery and pharmacy stockpiling the retail sales number would come around -20%. Initial jobless claims for the week ending with April 4 eased a bit coming in at 5245k vs 6606k the previous month, but are still at historic highs, almost 20 times higher than a month ago. Continuing claims have reached almost 12 million. 

IMF put out new projections for 2020 and now they see global GDP declining by -3%. All of the major economies will have negative GDP with Italy leading the way with -9.1% followed by France with -7.2% and Germany with -7%. US GDP is expected to come at -5.9%. They say that if outbreak lasts into the Q3 it could shave additional 3 pp from the GDP. For 2021 they see a rebound in growth and forecast it at 5.8%. Gilead Science published preliminary results of its Remdesivir drug treatment on coronavirus cases. Positive results were enough to raise markets spirits; however, the drug was tested on the small sample size so they are still partial and not verified. 

This week we will have housing data, new look at the initial jobless claims and durable goods data. 

Important news for USD: 

Tuesday:

• Existing Home Sales

Thursday:

• Initial Jobless Claims

Friday:

• Durable Goods Orders 

EUR 

France is extending its lockdown to May 11 while Austria and Denmark talk about easing of restrictions. Reports are showing that Germany plans to extend lockdown to May 3. France, Spain, Austria, Belgium and Greece extended the ban on short-selling to middle of the May while Italy keeps it imposed until June. Final inflation data for March show headline CPI at 0.7% y/y and core CPI at 1% y/y. 

This week we will have trade balance and sentiment data as well as preliminary consumer confidence and PMI numbers for April. 

Important news for EUR: 

Monday:

• Trade Balance

Tuesday:

• ZEW Economic Sentiment Indicator (EU and Germany)

Thursday:

• Markit Manufacturing PMI (EU, Germany and France)
• Markit Services PMI (EU, Germany and France)
• Markit Composite PMI (EU, Germany and France)

Friday:

• Ifo Business Climate (Germany) 

GBP 

UK is extending its lockdown until May 11. In the absence of economic events in the UK the pound was mostly influenced by the news about Prime Minister Johnson’s health. Movements in GBPUSD were centred around moving averages with buyers taking control during risk-on sentiment and sellers regaining it during risk-off sentiment. Overall the range for the pair was around 250 pips for the week with near-term bias remaining neutral. 

This week we will have employment, inflation, consumption and preliminary PMI data for April.

Important news for GBP:

Tuesday:

• Employment Change
• Unemployment Rate
• Average Weekly Earnings

Wednesday:

• CPI

Thursday:

• Retail Sales
• Markit Manufacturing PMI
• Markit Services PMI
• Markit Composite PMI

AUD

Employment report for March showed an employment change of 5.9k vs -30k as expected. Survey was done for the period up to the March 14 which is before restrictions on movement and lockdowns began. The unemployment rate ticked to 5.2% while participation rate stayed at 66%. Full-time employment change came in at -0.4k while part-time employment change came in at 6.4k. The report is of very little value since it catches only pre-virus data.

Chinese trade balance for period of January to March came in at $19.96bn with exports falling -6.6% y/y and imports falling -0.9% y/y. Exports to the EU -24.2%, the US -20.8% and Japan -1.4% fell while imports from the US and the EU fell -12.5% and -6.5% respectively. Imports from Japan rose 4.8%. Both exports and imports beat the expectations indicating that supply chains are not in such a dire state, however collapse of demand due to lockdowns worldwide is yet to be measured. Markets were starving for some good news in the sea of negativity so the beatings on data brought risk-on mood.

China is the first country to publish Q1 numbers and they show the full impact of the economic slowdown. Data came in at -9.8% q/q and -6.8% y/y, the worst since 1992. Retail sales for March came in bit better than previous month but still way worse than expected at -15.8% y/y. Manufacturing sector was not hit that hard so the industrial production number in March came in at -1.1% y/y vs -6.2% y/y as expected. Service industries have been hit very hard; therefore, the number is negative. Markets were encouraged by the beating on the industrial production.

This week we will have minutes from the latest RBA meeting as well as speech by governor Lowe.

Important news for AUD:

Tuesday:

• RBA Meeting Minutes
• RBA Governor Lowe Speech

NZD

RBNZ Governor Orr stated that asset-purchase program can be increased and that idea about implementing negative interest rates is not completely abandoned.

This week we will get Q1 inflation data and bi-monthly dairy auction.

Important news for NZD:

Monday:

• CPI

Tuesday:

• GDT Price Index

CAD

BOC has left the interest rate unchanged at 0.25% adding that it is an effective lower bound. They have announced an additional QE program intended for the purchase of provincial and corporate bonds. Provincial bonds will be acquired in the amount of up to CAD50bn while investment grade corporate bonds will be acquired in the secondary market in the amount of up to CAD10bn. So far BOC has accumulated over CAD200bn of new assets, amounting to about 10% of Canada's GDP. Governor Poloz stated that asset purchases are now the main driver of monetary policy as they do not see the effectiveness of negative interest rates on stability in the financial markets.

WTICrude prices fell below $18/barrel during the week due to the combination of several factors. Oversupply, not big enough production cut by the OPEC and historic drop in demand all weighed heavily on the oil prices. Russia and Saudi Arabia issued a joint statement about the necessity for further easing measures in order to boost the prices.

This week we will have consumption and inflation data.

Important news for CAD:

Tuesday:

• Retail Sales

Wednesday:

• CPI

JPY

Prime minister Abe announced expansion of the state of emergency to whole country until May 6. He told the citizens to avoid travelling to other prefectures. The week from April 29 and May 6 is called “Golden week” as many Japanese holidays are within that week, travelling was supposed to increase exponentially, therefore new measures have been taken. The government will handout JPY100k to households and it is expected that the cost of entire package will be around JPY14 trillion.

This week we will have trade balance and national inflation data as well as preliminary April PMIs.

Important news for JPY:

Monday:

• Trade Balance

Thursday:

• Markit Manufacturing PMI
• Markit Services PMI
• Markit Composite PMI

Friday:

• CPI

CHF

Total sight deposits for the week ending with April 10 came in at CHF634.1bn vs CHF627.2bn the previous week indicating continuation of SNB’s fight to subdue the rising Swissy.

This week we will have trade balance data.

Important news for CHF:

Tuesday:

• Trade Balance

_{You can follow all economic events on the Economic Calendar page on our Website. MT4 server time is set to GMT+3 and if you need assistance converting MT4 server time to your local time you can use some of the online time converters such as WorldTimeBuddy.}

_{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.}