It was a particularly busy week on the economic calendar, in the week ending 1st May.
A total of 60 stats were monitored, following the 59 stats in the week prior.
Of the 60 stats, 24 came in ahead forecasts, with 35 economic indicators coming up short of forecasts. 1 stat was in line with forecasts in the week.
Looking at the numbers, just 13 of the stats reflected an upward trend from previous figures. Of the remaining 47, 45 stats reflected a deterioration from previous.
For the Greenback, it was a bearish week, with a pickup in market risk appetite pinning back the Greenback. The U.S Dollar Spot Index fell 1.30% to 99.079, bringing to an end a run of 2 consecutive weeks in the green.
Economic data, COVID-19 news, and monetary policy were in focus throughout the week.
Looking at the latest coronavirus numbers.
The total number of coronavirus cases stood at 3,392,718 on Friday, which was up from last Friday’s 2,828,575. Week-on-week, the total number of cases rose by 564,143. On a global basis, this was lower than the previous week’s increase of 580,538.
In the U.S, the total rose from 924,996 to 1,129,060 with France, Germany, Italy, and Spain reporting a combined total of 781,839. Last Friday, the 4 member states and a combined total of 727,585.
Over the course of the week, there was an uptrend of new cases on a global basis, attributed to a rise in the U.S.
By contrast, the 4 most adversely affected EU member states reported a downward trend. Of the 4, France saw a material decline in new cases, with a daily average of 1,049 news cases in the week.
In spite of the upward trend in the U.S, plans of easing lockdown measures remained in place.
Key support for riskier assets in the week was positive updates on the effectiveness of COVID-19 treatment drug remdesivir.
Out of the U.S
It was another relatively busy week on the economic calendar, with the economic data skewed to the negative.
Key stats included April consumer confidence and 1st quarter GDP numbers on Tuesday and Wednesday.
The CB Consumer Confidence Index slumped from 120.0 to 86.9 in April, which was of little surprise following the lockdown.
In the 1st quarter, the economy contracted by 4.8%, which was far worse than a forecasted 4.0% contraction.
Of greater concern is the fact that the lockdown had yet to take full effect until April, suggesting worse to come.
On Thursday, the markets had hoped for a marked fall in the number of weekly jobless claims. A marked fall would have eased concerns of a more deep-rooted recession.
Yet more disappointment, however, with a 3.839 m increase ringing the alarm bells at the end of the month.
While the U.S administration is talking of easing lockdown measures, the number of layoffs has been unprecedented. It’s going to take far longer than initially anticipated for life to return to normal for the vast majority of the labor market.
Rounding off the week, the markets preferred ISM Manufacturing PMI for April delivered more bad news. The manufacturing PMI fell from 49.1 to 41.5, though this was better than a forecasted 36.9.
Away from the stats, the FED left rates unchanged on Wednesday, while delivering yet more support. Powell assured the markets that rates would remain close to zero until the economy recovers.
Powell held back from painting a rosy picture by delivering a more realistic view of the economy and outlook.
While the FED delivered support for riskier assets on Wednesday, economic data on Thursday was the straw that broke the camel’s back…
In the equity markets, the Dow fell by 0.22%, with the NASDAQ and S&P500 declining by 0.0.21% and 0.34% respectively. A Friday sell-off left the majors in the red for the week.
Out of the UK
It was a particularly quiet week on the economic calendar. Economic data was limited to finalized April manufacturing PMI figures on Friday.
The PMI came in at a record low 32.6, which was revised down from a prelim 32.8. In March, the PMI had stood at 47.8.
While the stats were skewed to the negative, a pickup in risk appetite delivered much-needed support.
Also providing support was Boris Johnson’s return to office and plans to ease lockdown measures. In the week, the government talked of having passed the peak in the pandemic, which was also Pound positive.
In spite of the uptick in the week, the markets will need to consider the outlook that remains murky. There’s Brexit and more uncertainty to consider, assuming that the government extends the transition period…
In the week, the Pound rose by 1.12% to $1.2506. The FTSE100 ended the week up by 0.19%, partially reversing a 0.60% fall from the previous week.
Out of the Eurozone
It was a busy week economic data front, with the stats heavily skewed to the negative once more.
The markets had to wait until Thursday for a data deluge. Key stats included 1st quarter GDP numbers for France, Spain, and the Eurozone.
April unemployment numbers for Germany also delivered the bears with hope…
In the 1st quarter, the French economy contracted by 5.8%, which was the largest contraction on record.
Economic data from the Eurozone also broke records, with the economy shrinking by 3.8%.
From Germany, a 373k jump in unemployment led to a rise in the unemployment rate from 5.0% to 5.8%
On the monetary policy front, the ECB held back from expanding the bond-buying program.
As expected, Lagarde looked to place the onus on EU finance ministers to drum up support for the economy. Lagarde did assure ECB support but little else. She also talked of a contraction of between 5 to 12% for 2020…
An unwilling ECB and uncooperative EU member states do bring into question the viability of the EU project. I have continued to raise concerns over this. Brussels is in no position to force the likes of the Netherlands and Northern Europe to open their coffers…
For the week, the EUR rose by 1.46% to $1.0981, reversing a 0.48% decline from the previous week.
For the European major indexes, it was a bullish week. The DAX30 rallied by 5.08% to lead the way, with the CAC30 and EuroStoxx600 rising by 4.07% and 3.17% respectively.
It was a bullish week for the Aussie Dollar and the Kiwi Dollar, in spite of a sharp reversal on Friday.
In the week ending 1st May, the Aussie Dollar rose by 0.74% to $0.6418, with the Kiwi Dollar up by 0.76% to $0.6063.
For the Aussie Dollar
It was a relatively busy week for the Aussie Dollar on the economic data front.
1st quarter inflation figures were in focus along with private sector credit and manufacturing sector numbers.
A pickup in inflationary pressure in the 1st quarter provided support at the start of the week. The upside was limited, however, with commodities under pressure at the start of the 2nd quarter.
In contrast, wholesale inflationary pressures softened, though marginally…
From the private sector, credit was on the rise in March, driven by a jump in business credit. The manufacturing sector hit a wall, however, with the AIG Manufacturing Index sliding from 53.7 to 35.8. It was the worst contraction since the Global Financial Crisis.
While the stats were mixed, risk appetite had delivered support for the Aussie Dollar before a 1.44% slide on Friday.
For the Kiwi Dollar
It was a quieter week on the economic calendar. March trade data and April business confidence figures delivered mixed results.
Defying the odds, exports hit a record high in March, leading to a widening in the surplus from NZ$531m to NZ$672m.
Year-on-year, the deficit widened, though the widening was certainly not material considering global trade terms.
Business Confidence did take a dive, however, with the ANZ Business Confidence Index sliding from -63.5 to -66.6.
The ANZ survey had very little to offer to the bulls, leaving sentiment towards COVID-19 to provide support.
Key news from the week was New Zealand becoming virus-free, which would support a more rapid easing of lockdown measures.
For the Loonie
It was a relatively quiet week on the economic calendar, with the stats skewed to the negative.
Stats were limited to February GDP and March RMPI figures that had a muted impact in the week.
With stats on the lighter side, the upside for the Loonie came from a pickup in crude oil prices. Improved market risk appetite also delivered.
Positive updates on the clinical trials of remdesivir were key for riskier assets in the week. Successful treatment would allow governments to more aggressively ease lockdown measures and open borders.
Both are key to the demand for crude and to a rebuild of the supply chain.
The Loonie rose by 0.10% to end the week at C$1.4048. A 1.03% pullback on Friday limited the upside for the week.
For the Japanese Yen
It was a relatively busy week on the data front.
Key stats included March retail sales and prelim industrial production figures.
While both sets of numbers came in ahead of forecasts, both were down from the previous month.
Industrial production slid by 3.7%, following a 0.3% fall in February. Retail sales tumbled by 4.6%, reversing a 1.6% rise in February.
Of greater concern for Japan, however, was the rise in new coronavirus cases.
Outside of the numbers, the BoJ stepped forward to deliver monetary policy support.
The markets brushed aside inflation figures on Friday, with deflationary pressures anticipated near-term.
The Japanese Yen rose by 0.56% to end the week at ¥106.91. In the week prior, the Yen had risen by just 0.03% against the U.S Dollar.
Out of China
It was a relatively busy week on the economic data front.
Industrial profit figures for March failed to spook the markets on Monday, in spite of profits tumbling by 34.9% year-on-year. In February, profits had risen by 5.4%.
Later in the week, private sector PMIs for April delivered mixed results, though nothing alarming.
The NBS Manufacturing PMI rose from 53.0 to 53.4, while the Caixin Manufacturing PMI slipped from 50.1 to 49.4.
With contribution from the services sector on the rise, a pickup in service sector activity was positive. The NBS Non-Manufacturing PMI rose from 52.3 to 53.2.
While the numbers were well above those seen in the U.S and the EU, global demand will be a concern near-term…
In the week ending 1st May, the Yuan rose by 0.26% to CNY7.0632 against the Greenback.
The CSI300 and Hang Seng ending the week up by 3.41% and 3.04% respectively.