On Monday, at 00:30 GMT, Japan will publish the manufacturing PMI for May. At 01:00 GMT Australia will present inflation data from MI for May. Then the focus will be on manufacturing PMI indices for May: China will report at 01:45 GMT, France at 07:50 GMT, Germany at 07:55 GMT, the Eurozone at 08:00 GMT, Britain at 08:30 GMT, and the US at 13:45 GMT. At 14: 00 GMT, the US will publish the ISM manufacturing index for May and announce changes in construction spending for April. At 22:45 GMT, New Zealand will report changes in building permits for April.
On Tuesday, at 01:30 GMT, Australia will announce changes in the company's operating profit and balance of payments for the 1st quarter. At 04:30 GMT in Australia, the RBA's interest rate decision will be announced and the RBA rate statement will be released. At 06:30 GMT Switzerland will announce the change of volume of retail trade for April. At 08:30 GMT, Britain will announce changes in the volume of the M4 money supply aggregate, the number of approved mortgage applications and the volume of net loans to individuals for April. At 22:30 GMT, Australia will release the AIG construction activity index for May.
On Wednesday, at 01:30 GMT, Australia will report changes in GDP for the 1st quarter and the number of building permits for April. At 01:45 GMT China will release the Markit/Caixin Services PMI for May. At 05:45 GMT, Switzerland will announce changes in GDP for the 1st quarter. At 07:50 GMT, France will present the services PMI for May. At 07:55 GMT, Germany will announce changes in the unemployment rate and the number of unemployed for May. Then the focus will be on services PMI for May: Germany will report at 07:55 GMT, the Euro zone at 08:00 GMT, and Britain at 08:30 GMT. At 09: 00 GMT, the Euro zone will release the producer price index for April and announce changes in the unemployment rate for April. At 12:15 GMT, the US will report a change in the number of employees from ADP for May. At 12:30 GMT, Canada will announce changes of labor productivity for the 1st quarter. At 13:45 GMT, the US will release the PMI for the services sector for May. At 14:00 GMT in Canada, the Bank of Canada's interest rate decision will be announced and the BOC Rate Statement will be released. Also at 14: 00 GMT, the US will release the ISM index for the non-manufacturing sector for May and report changes in the volume of production orders for April. At 14:30 GMT, the US will announce changes in oil reserves according to the Ministry of energy.
On Thursday, at 01:30 GMT, Australia will report changes in the trade balance and retail trade volume for April. At 06:30 GMT, Switzerland will publish the consumer price index for May. At 08:30 GMT, Britain will release the PMI for the construction sector for May. At 09:00 GMT, the Euro zone will announce changes in retail sales for April. At 11:45 GMT in the eurozone the ECB's interest rate decision will be announced. At 12:30 GMT, the ECB will hold a press conference. Also at 12:30 GMT, Canada and the United States will report changes in the foreign trade balance for April. Also at 12: 30 GMT, the US will announce changes of labor productivity in the non-manufacturing sector and the level of labor costs for the 1st quarter. as well as the number of initial applications for unemployment benefits. At 22:30 GMT, Australia will release the AIG services activity index for May. At 23:30 GMT Japan will report a change in household spending in April.
On Friday, at 05:00 GMT, Japan will publish an index of leading economic indicators for April. At 06:00 GMT, Germany will announce changes in industrial orders for April. At 07:00 GMT, Switzerland will report changes in the volume of the SNB's foreign currency reserves for May. At 07:30 GMT, Britain will release the Halifax house price index for May. At 12:30 GMT, Canada will announce changes in the unemployment rate and employment for May. Also at 12: 30 GMT, the US will announce changes in the unemployment rate and the Nonfarm Payrolls for May. At 14:00 GMT, Canada will present the Ivey business activity index for May. At 17:00 GMT the US will release a Baker Hughes report on the number of active oil rigs. At 19:00 GMT the United States will report a change in consumer lending for April.
On Sunday, at 23:50 GMT, Japan will announce changes in GDP for the 1st quarter, as well as the volume of orders for machinery and equipment and the current account balance for April.
FXStreet reports that analysts at TD Securities note that Canada's real GDP for Q1 and March surprised to the upside with contractions of 8.2% q/q (TD/market: -10%) and 7.2% m/m (TD: -7.0%, market: -8.5%). There was little market impact in either rates or FX.
“The Canadian economy contracted by 8.2% annualized in Q1 (TD/market: -10%), just shy of the 8.7% contraction in Q1 2009, on a sharp pullback (-9.0%) in household consumption while industry-level GDP plunged by 7.2% m/m in March, in line with TD's forecast (-7.0%) and slightly above the market consensus for -8.5%.”
“Statistics Canada also published flash GDP estimates which point to another 11% m/m contraction for April. An 11% decline in April, along with a slightly better handoff from March, hints at a Q2 contraction in the 40% (annualized) range.”
“We remain constructive on Canadian fixed income (we especially like owning the long-end of the curve), and we like USD/CAD higher over the short-term.”
reading for the April Reuters/Michigan index of consumer sentiment came in at 72.3
compared to a preliminary reading of 73.7 and the April final reading of 71.8.
Economists had forecast the index to be revised up to 74.0.
According to the report, the index of the current economic conditions rose 10.8 percent m-o-m to 82.3 from April’s final reading of 74.3.
Meanwhile, the index of consumer expectations fell 6.0 percent m-o-m to 65.9 from April’s final reading of 70.1.
Richard Curtin, the Surveys of Consumers chief economist, noted that: “Consumer sentiment has remained largely unchanged during the past two months, with the final May estimate just a half index point above the April reading. The CARES relief checks and higher unemployment payments have helped to stem economic hardship, but those programs have not acted to stimulate discretionary spending due to uncertainty about the future course of the pandemic. It should not be surprising that a growing number of consumers expected the economy to improve from its recent standstill, or that the majority still thought conditions in the economy would remain unfavorable in the year ahead. ”
report revealed on Friday that business activity in Chicago decreased this
month, as business confidence cooled further amid the COVID-19 crisis.
The MNI Chicago Business Barometer, also known as Chicago purchasing manager's index (PMI) came in at 32.3 in May, down from an unrevised 35.4 in April. That was the lowest level since March 1982.
Economists had forecast the index to increase to 40.0.
A reading above 50 indicates improving conditions, while a reading below this level shows worsening of the situation.
According to the report, New Orders decreased by 2.3 points to the lowest since July 1980, while Production ticked down 6.3 percent in May, remaining at a 40-year low as firms reported pandemic-induced temporary shutdowns. In addition, Order Backlogs dropped 28.0 percent to the lowest level since March 2009, and Supplier Deliveries fell by 5.8 percent. Meanwhile, Employment edged marginally higher, rebounding after April’s sharp drop, and Inventories rose further, with firms noting a higher level than needed.
Canada announced on Friday that the country’s gross domestic product (GDP) dropped
7.2 percent m-o-m in March after a revised 0.1 m-o-m advance in February (originally,
That was better than economists’ forecast for a decline of 9.0 percent m-o-m, but marked the steepest monthly contraction on record.
In the first quarter of 2020, the Canadian GDP fell 2.1 percent q-o-q, following a 0.1 percent q-o-q growth in the fourth quarter of 2019. That was the sharpest drop since the first quarter of 2009.
According to the report, the q-o-q downturn in GDP reflected measures imposed in March to contain the pandemic, such as school and non-essential business closures, border shutdowns, and travel restrictions, as well as events earlier in the quarter, mainly the Ontario teachers' strike and rail blockades in February. Household spending reduced by 2.3 percent q-o-q in the first quarter, the steepest quarterly drop ever recorded, while governments' final consumption expenditure decreased 1.0 percent q-o-q, the largest decline since the first quarter of 2013, reflecting school closures and curtailed government administration. Exports dropped 3.0 percent q-o-q, and imports declined 2.8 percent q-o-q, as the country's major trading partners implemented similar public health measures.
Expressed at an annualized rate, Canada’s GDP declined 8.2 percent in the first quarter after a revised 0.6 percent increase in the previous quarter (originally a 0.3 percent rise), compared to economists’ forecast of 10.0 percent contraction.
Department reported on Friday that consumer spending in the U.S. tumbled 13.6
percent m-o-m in April after a revised 6.9 percent m-o-m plunge in March (originally,
a 7.5 percent m-o-m decline). That was the largest monthly decline in personal
spending on record. Economists had forecast the reading to show a 12.6 percent
Meanwhile, consumer income surged 10.5 percent m-o-m in April, following a revised 2.2 percent m-o-m drop in the previous month (originally, a 2.0 percent m-o-m fall). That was the biggest monthly rise ever in personal income. Economists had forecast a 6.5 percent m-o-m decline.
The April surge in personal income primarily reflected an increase in government social benefits to persons as payments were made to individuals from federal economic recovery programs in response to the COVID-19 pandemic.
The personal consumption expenditures (PCE) price index, excluding the volatile categories of food and energy, which is the Fed's preferred inflation measure, fell 0.4 percent m-o-m in April, following an unrevised 0.1 percent m-o-m decrease in the prior month. Economists had projected the index would drop 0.3 percent m-o-m.
In the 12 months through April, the core PCE increased 1.0 percent, following an unrevised 1.7 percent growth in the 12 months through March. Economists had forecast an advance of 1.1 percent y-o-y.
FXStreet reports that analysts at Credit Suisse note that NZD/USD stays capped for now by the ‘neckline’ to the 2015/2020 ‘triangle’ at 0.6216 and the 78.6% retracement of the February/March 2020 fall at 0.6239.
“NZD/USD is seeing another push higher to break above the ‘neckline’ to the 2015/2020 ‘triangle’ at 0.6216, just ahead of the 78.6% retracement of the February/March 2020 fall at 0.6239. Although further consolidation should occur around this key medium-term inflection point, we look this zone to ideally continue to cap and are alert for a fresh top here, in line with daily RSI approaching overbought territory.”
“Above the key 0.6239 would see resistance next at 0.6265/68, just ahead of the 200-day average at 0.6317. Above here on a closing basis would remove our core bear view.”
“Support is seen initially seen at 0.6189, then 0.6170, ahead of 0.6094/81. Removal of here would turn the near-term risk back lower, with the next level at 0.6034, before the more important 0.5925/06, where we would expect to see a temporary floor.”
|08:00||Eurozone||Private Loans, Y/Y||April||3.4%||3%|
|08:00||Eurozone||M3 money supply, adjusted y/y||April||7.5%||7.8%||8.3%|
|09:00||Eurozone||Harmonized CPI, Y/Y||May||0.3%||0.1%||0.1%|
|09:00||Eurozone||Harmonized CPI ex EFAT, Y/Y||May||0.9%||0.8%||0.9%|
JPY rose against most other major currencies in the European session on Friday as investors were awaiting the U.S. president Donald Trump's response to China's Hong Kong security bill.
Trump said on Thursday that he would hold a press conference about China on Friday. Media report that the president can announce sanctions on Chinese officials over advancement of new national security laws for Hong Kong. It is expected that Trump's statement could dramatically heighten the already simmering tensions between Washington and Beijing.
Hong Kong's government, meanwhile, urged the U.S. not to withdraw its special status, arguing it would harm both economies. "Any sanctions are a double-edged sword that will not only harm the interests of Hong Kong but also significantly those of the U.S.," Hong Kong's government stated late on Thursday.
FXStreet reports that according to analysts at Credit Suisse, AUD/USD is seeing a further attempt to break above the pivotal resistance zone at 0.6658/6706, which ideally continues to cap.
“Although further consolidation around the pivotal resistance zone composed of the 200-day average, the March high, and 78.6% retracement at 0.6658/6706 should still be allowed for, in particular as a small bull ‘triangle’ is still in place, we look for this area to cap despite the break lower we are seeing in the broader USD.”
“We see support initially at 0.6612, then 0.6588, ahead of the late May lows at 0.6520/06, where we would expect to see fresh buying at first. Beneath here on a closing basis would negate the bull ‘triangle’ and reinforce a swing lower, with next support at 0.6412/00.”
“A closing break above 0.6706 would in contrast mark a break of a major barrier and turn the medium-term risks to the upside, in line with the broader USD weakness, with resistance seen thereafter at 0.6745/50, ahead of the February high at 0.6774.”
FXStreet reports that according to FX Strategists at UOB Group, USD/CNH’s outlook remains positive and is expected to climb further on a breakout of the 7.20 level.
24-hour view: “Our expectation for ‘further USD strength’ did not materialize as USD traded between 7.1542 and 7.1868 before ending the day little changed at 7.1712 (-0.07%). USD has likely moved into a consolidation phase and for today, it is expected to trade between 7.1500 and 7.1900.”
Next 1-3 weeks: “We warned yesterday ‘the risk of USD breaking above 7.1652 has increased’ and highlighted that such a move ‘could potentially lead to a sharp and rapid rise’. While the subsequent rally did not break the major 7.2000 level (high of 7.1966), strong upward momentum suggests the risk for the coming days is still on the upside. Note that the record high was at 7.1960 in September last year and from here, a break of 7.2000 could potentially lead to further strong gains as once above this ‘round number’ resistance, the next resistance level of note is nearer to 7.2400. All in, the current positive outlook is deemed as intact as long as USD holds above 7.1400 (‘strong support’ level was at 7.1100 yesterday).”
FXStreet reports that economists at Credit Suisse apprise that GBP/USD is seen at risk of breaking above 1.2363, its downtrend from late March, which would re-expose the April highs at 1.2643/48.
“Above 1.2363 should confirm to see the downtrend break with resistance then seen next at 1.2467 and then more importantly at the April highs and 200- day average at 1.2643/48 and 1.2669 respectively. We would again expect significant sellers to show here. A close above 1.2669 though would instead suggest we are seeing a more significant turn higher, with resistance seen next at 1.2711.”
“Support is seen at 1.2309 initially, below which can ease the immediate upside bias with support next at 1.2284/78 and then more importantly at the uptrend and price support at 1.2222/05, which we look to now hold.”
FXStreet notes that Euro-area inflation came in at 0.1% y/y in May, down from 0.3% last month, while core inflation stood unchanged. The outlook is more uncertain further out, but analysts at Nordea see mostly downside risks to inflation in the coming years.
“Headline inflation in the Euro area continued down to 0.1% y/y in May according to the flash estimate. Energy prices continue to pull heavily on the headline, as it dropped 12% y/y, while unprocessed food prices were 6.5% higher. Core inflation stood unchanged at 0.9% y/y, surprisingly.”
“Headline inflation in Germany as measured by the preliminary HICP was 0.5% y/y in May, in line with expectations and down from last month’s 0.8%. Consumer prices in France came in with HICP at 0.2% y/y. In Spain, inflation dipped even further below zero than last month, reporting HICP at -0.9% y/y. Italian prices also dropped compared to last year, with preliminary inflation at -0.1% y/y.”
“Our forecast is for very low headline inflation this year and next year, at 0.0% and 0.5% y/y respectively. For Italy and Spain, we see a negative outcome this year.”
FXStreet reports that the Credit Suisse analyst team notes that USD/JPY has broken its uptrend from March to turn the risk lower with support seen at 106.77/74.
“Below 107.31, the USD/JPY pair marks a more definitive rejection for a break of the uptrend from March, 13-day average, and near-term price support. This should see the risk turn lower again with support seen at 107.03 next, then 106.77/74, the mid-May low. Whilst a fresh rebound from here should be allowed for, a break in due course can open the door to a retest of the 105.98 outright May low.”
“Resistance at 107.31/36 ideally caps to keep the immediate risk lower. Above can see strength back to a cluster of resistances at 107.72/89, but with this expected to now cap.”
FXStreet reports that if inflation does return from 2021, the consequences could be very severe as a debt crisis would be inevitable, according to analysts at Natixis.
“There are structural long-term drivers of a resurgence of inflation: reshoring of production from low-labour-cost emerging countries; population ageing, driving up the proportion of non-producing retired consumers.”
“OECD countries will be hit by a negative supply shock: companies and their capital will disappear, productivity will fall due to the new health regulations: we should, therefore, expect a fall in potential GDP, which is inflationary.”
“Even though unemployment is high, wage demands are going to appear, starting from the sectors that have played a key role during the health crisis: healthcare, retail, transport, security, agrifood, etc.”
“A helicopter money-type monetary policy is being employed: central banks are monetising fiscal deficits, which are resulting from public transfer payments to economic agents. This is equivalent to direct transfers of money to these economic agents and, therefore, boosts demand for financial and real estate assets but also potentially demand for goods and services.”
CNBC reports that U.S. President Donald Trump could punish Beijing for eroding Hong Kong’s autonomy and other human rights abuses — but his options won’t be very damaging to China, said a leading Chinese economist on Friday.
Hong Kong has special privileges under American law, which treats the territory more favorably than the mainland, and has so far exempted the Asian financial hub from punishing tariffs that the U.S. has imposed on China. Observers say the U.S. can revoke that special status for Hong Kong and that would hurt China, which relies on Hong Kong as a bridge to the rest of the world.
But Li Daokui, an economics professor from Tsinghua University, told CNBC that any threats to revoke Hong Kong’s special privileges from the U.S. won’t be “very much credible” because American businesses would get hurt too.
China on Thursday approved a controversial national security law in the special administrative region of Hong Kong, a move that critics say will erode the freedoms of its people and allow Beijing greater control over the semi-autonomous region.
Trump is set to hold a news conference later Friday to discuss China. The president didn’t provide details, but there is speculation he may announce his administration’s response to several developments this week.
“If you think about it, Hong Kong is not a center of trade of commodity,” Li said. ”He added that the city is instead a financial services hub where huge amounts of money flow through.
“If President Trump threatens to close (the) door (on) Hong Kong in terms of money flow, it will inflict tremendous damage to the US business community, so that’s a cost too high for President Trump to pay,” said the professor who was previously a member of the monetary policy committee at China’s central bank, and served as an external advisor to the International Monetary Fund.
Li said it’s “highly likely” that Trump would impose sanctions on certain high-level Chinese government officials, such as by closing their financial accounts in the U.S. But even so, the actual political damage from such action is “not very much,” he added.
That’s because anti-corruption campaign in China over the past few years has led many Chinese officials to “cut off their financial ties with U.S. entities,” he explained.
Reuters reports that European Central Bank Governing Council member Ignazio Visco said on Friday policy makers had to act to head off deflationary risks brought about by the sudden halt to economic activity during the coronavirus crisis.
Visco, who is also governor of the Bank of Italy, said disinflationary pressures could be strong and persistent, threatening economies where already high levels of public debt are growing massively during the crisis.
Presenting the Bank of Italy's annual report, he said the ECB was ready to use all the instruments available to ensure that all sectors of the economy could benefit from accommodative financing conditions.
"Steps must be taken to counter the significant risk of low inflation and the marked fall in economic activity from translating into a permanent reduction in expected inflation or into the possible resurfacing of the threat of deflation," he said.
"Also as a result of the high levels of public and private debt in the euro area as a whole, this could trigger a dangerous spiral between the fall in prices and that in aggregate demand."
According to figures released today by the Society of Motor Manufacturers and Traders (SMMT), UK car production fell to its lowest level since the Second World War in April, down -99.7%. As the coronavirus crisis forced plants to close, just 197 premium, luxury and sports cars left factory gates in the month, models that had been assembled prior to shutdowns with only finishing touches needed.
In April, instead of making cars for the UK and global export markets, many manufacturers refocused efforts on producing personal protective equipment (PPE), including face shields, visors and medical gowns for use by healthcare professionals.
Output for both the domestic and overseas markets was severely curtailed in the month, with 152 cars built for export and 45 for customers in the UK. The exceptional month follows a particularly weak April 2019, when volumes fell -44.5% year on year due to temporary shutdowns as manufacturers sought to mitigate the impact of an expected end-March Brexit.
The news comes as the latest independent analysis suggests annual UK car production could fall below one million units in 2020, which would represent lower volumes than in 2009 and possibly a third lower than expected in January pre-crisis.3
Mike Hawes, SMMT Chief Executive, said: "With the UK’s car plants mothballed in April, these figures aren’t surprising but they do highlight the tremendous challenge the industry faces, with revenues effectively slashed to zero last month. Manufacturers are starting to emerge from prolonged shutdown into a very uncertain world and ramping up production will be a gradual process, so we need government to work with us to accelerate this fundamentally strong sector’s recovery, stimulate investment and safeguard jobs. Support to get all businesses through this short-term turmoil will ensure the UK’s many globally-renowned brands can continue to make the products that remain so desirable to consumers the world over and, in turn, help deliver long-term prosperity for Britain".
According to a flash estimate from Eurostat, in May 2020, a month still marked with COVID-19 containment measures, euro area annual inflation is expected to be 0.1%, down from 0.3% in April. Meanwhile, the core figures steadied at +0.9% in the reported month when compared to +0.8% expectations and +0.9% previous.
Looking at the main components of euro area inflation, food, alcohol & tobacco is expected to have the highest annual rate in May (3.3%, compared with 3.6% in April), followed by services (1.3%, compared with 1.2% in April), non-energy industrial goods (0.2%, compared with 0.3% in April) and energy (-12.0%, compared with -9.7% in April).
FXStreet reports that Warren Lovely and Taylor Schleich from the National Bank of Canada offer up some high-level commentary on how certain conditions evolved under Poloz’s watch, with an eye towards the situation the new guy, Tiff Macklem, inherits next week.
“Judged solely on his ability to keep inflation inside the mandated 1-3% target band, give Poloz his due. Before he took over, all items inflation had been relatively muted, falling shy of 1% in five of the seven months leading up to Jun-2013. But inflation fell in line under Poloz; over his seven-year run, headline inflation rarely broke out of the 1-3% target band. [...] Recent BoC speak has acknowledged downside inflation risks, and look for this issue to be taken up in next week’s rate statement, the first of the Macklem regime.”
“Poloz goes out a net loser on jobs and growth, not that it’s his fault. From Jun-2013 to Feb-2020, 1.5 million net new jobs were created in Canada (average annualized growth of 1.2%), with the unemployment rate hovering at 5½% early in the year. But March and April bloodletting have (at least temporarily) wiped out a combined 3 million jobs, driving joblessness to 13%.”
“As for GDP growth, it’s been somewhat choppy, including a mid-mandate wobble linked to 2015’s oil-price collapse followed by a 2017 resurgence. [...] The peak-to-trough destruction of Canadian output could be around 20%, turning the GDP clock back a decade. Even with wholesale capacity destruction, it could take one half or more of Macklem’s seven-year term to close the output gap opened up by the virus, assuming no second wave or other serious setbacks.”
“When Poloz took over from Carney, the BoC’s policy interest rate was 1%. That seemed low at the time but looks downright juicy vs. today’s 0.25% rate setting. Poloz became the second straight governor to explore the lower effective bound for the policy interest rate and hands a GoC yield curve to Mr. Macklem that belongs in the twilight zone relative to prior leadership transitions. Let’s assume the incoming governor would prefer to avoid negative interest rates in the same way Jay Powell’s Fed is trying to sidestep the negative rate rabbit hole.”
“BoC balance sheet: When Poloz arrived, BoC assets amounted to C$88 billion or less than 5% of GDP. As of last week, assets had ballooned five-fold to C$442 billion. Based on established purchase programs, BoC assets may be en route to ~30% of GDP or more. It’s for Macklem to determine by how much and for how long the BoC’s balance sheet is needed to spur economic recovery.”
According to the report from European Central Bank, the annual growth rate of the broad monetary aggregate M3 increased to 8.3% in April 2020 from 7.5% in March, averaging 7.1% in the three months up to April. Economists had expected a 7.8% increase.
The components of M3 showed the following developments. The annual growth rate of the narrower aggregate M1, which comprises currency in circulation and overnight deposits, increased to 11.9% in April from 10.4% in March. The annual growth rate of short-term deposits other than overnight deposits (M2-M1) decreased to -0.3% in April from 0.0% in March, while the annual growth rate of marketable instruments (M3-M2) decreased to 6.7% in April from 10.1% in March.
Annual growth rate of adjusted loans to households decreased to 3.0% in April from 3.4% in March
Annual growth rate of adjusted loans to non-financial corporations increased to 6.6% in April from 5.5% in March
CNBC reports that key economic indicators may be skewed, and perhaps less accurate, as a result of the coronavirus pandemic, according to the International Monetary Fund.
“Accurate and timely economic data are crucial for informing policy decisions, especially during a crisis. But the COVID-19 pandemic has disrupted the production of many key statistics,” the fund said in a blog post this week.
The coronavirus disease, formally known as Covid-19, first emerged in the Chinese city of Wuhan last December. It has since infected around 5.8 million people and killed more than 360,000 globally, according to data compiled by Johns Hopkins University.
“Without reliable data, policymakers cannot assess how badly the pandemic is hurting people and the economy, nor can they properly monitor the recovery,” read the post written by three members of the IMF’s statistics department.
The blog post comes at a time when many countries are releasing data on gross domestic product for the first three months of the year — when the coronavirus started to spread globally. GDP is a broad measure of the size of an economy and is widely watched indicator by governments, central banks and investors.
China opposes US actions, calls it 'pure nonsense'
Urges US to stop frivolous political manoeuvres
KOF Economic Research Agency said, in May, the KOF Economic Barometer reaches the lowest value in its history. After the exceptionally strong decline in April, the Barometer falls again, but at 6.5 points, the minus is much smaller than in the previous month. The rapid decrease of the last three months is more pronounced than, for example, during the financial crisis in 2008/2009.
The KOF Economic Barometer falls by 6.5 points in May, from 59.7 in April (revised from 63.5) to 53.2 points. Since the beginning of the year, it has thus almost halved. While all indicator groups pulled the barometer down in April, some indicator groups now have a positive effect. However, as in April, the manufacturing sector continues to have the strongest negative impact. Indicators relating to foreign demand also have a clearly negative impact on the barometer. By contrast, private consumption and the construction industry are sending slightly improved signals.
Within the goods producing sector (manufacturing and construction), the indicators on production capacities and barriers to production in particular are weighing on development. Indicators regarding the competitive position also point in a negative direction. Bundles of indicators that reflect the order backlogs have improved slightly.
In the manufacturing sector, indicators for the metal industry, the textile industry and machine and vehicle construction determine its negative development. The prospects of the manufacturers of electrical goods are further accelerating this decline. The paper and printing industry, on the other hand, recorded a slight recovery, being one of the few sectors within the manufacturing industry with a slightly improving set of indicators.
|01:30||Australia||Private Sector Credit, y/y||April||3.6%||3.6%|
|01:30||Australia||Private Sector Credit, m/m||April||1.1%||0.0%|
|05:00||Japan||Housing Starts, y/y||April||-7.6%||-12.1%||-12.9%|
|06:00||Germany||Retail sales, real adjusted||April||-5.6%||-12%||-5.3%|
|06:00||Germany||Retail sales, real unadjusted, y/y||April||-2.8%||-14.3%||-6.5%|
|06:45||France||GDP, q/q||Quarter I||-0.1%||-5.8%||-5.3%|
|07:00||Switzerland||KOF Leading Indicator||May||59.7||70||53.2|
During today's Asian trading, the US dollar fell against most of the world's major currencies.
Traders ' attention is focused on relations between Washington and Beijing, which have seriously deteriorated after China's decision to create its own national security law for Hong Kong. US President Donald Trump promised on Friday to announce measures that Washington will take against China in response to the country's attempt to strengthen control over Hong Kong. Traders fear that the United States will return some of the duties for Chinese goods that were canceled earlier, experts said.
The ICE index, which tracks the dynamics of the US dollar against six currencies (Euro, Swiss franc, yen, canadian dollar, pound sterling and Swedish Krona), fell by 0.1%.
Statistics released today indicated a smaller-than-expected decline in retail sales in Germany in April.
The indicator decreased by 5.3% compared to the previous month, the Federal statistical agency reported. The decline slowed from the 5.6% drop in March, which was the most significant since January 2007. The consensus forecast of experts provided for sales in April by 12%.
According to the report from INSEE, in Q1 2020, real gross domestic product (GDP) fell sharply: -5.3% after -0.1% in Q4 2019, thus a revision of +0.5% compared with the first estimate published in April. Economists had expected a 5.8% decrease.
Household consumption expenditure recorded an unprecedented drop (-5.6% after +0.3%). Total gross fixed capital formation (GFCF) fell even more sharply (-10.5% after +0.1%). All in all, total domestic demand (excluding changes in inventories) contracted: it contributed -6.0 points to GDP growth.
Imports fell (-5.7% after -0.7%), but less sharply than exports which fell by 6.1% (after -0.4% in Q4 2019). Overall, the contribution of foreign trade balance to GDP growth was zero, after +0.1 points in the previous quarter. Conversely, changes in inventories contributed positively to GDP growth (+0.6 points after -0.5 points).
Household gross disposable income (GDI) decreased slightly (-0.1% after +0.9%): the decrease in value added produced by sole proprietors was partly offset by subsidies from the solidarity fund, so that their mixed income fell by 1.0%. With the recourse to the partial activity scheme, the wage bill received by households fell sharply (-1.8% after +0.7%), which was offset by a strong acceleration in social benefits in cash (+2.8% after +0.4%). Taxes on income and wealth fell (-1.5% after -2.9%): despite the technical rebound following the reduction in housing tax at the end of 2019, the reform of the income tax scale and the adjustment of taxes to the fall in income received supported disposable income. In addition, social contributions paid by households fell (-1.4% after +0.9%) with the decline in the wage bill.
Household consumption prices continued to increase (+0.3% after +0.2%). Overall, the decline in purchasing power of household GDI remained limited (-0.4% after +0.7%) given the scale of the fall in activity. Measured by consumption unit to bring it to an individual level, it fell by -0.5% (after +0.5%). At the same time, household consumption fell (-5.6% after +0.3%), resulting in a sharp rise of the saving rate to 19.6% after 15.1% in Q4 2019.
We need to find ways to move them off that and back to work
We need businesses to get back to work
eFXdata reports that Danske Research likes long EUR/GBP in the near-term and prefers to express that via an options structure.
"Near term, we expect a repricing of the Brexit risk premium ahead of the 1 July deadline to send EUR/GBP higher again. We believe this will mirror similar events in late 2018 and summer 2019, when no deal Brexit fears were increasing. The fourth negotiation round is set to begin on 1 June. We do not expect any major breakthrough, as the two sides remain too far from each other. We think the cross could move as high as 0.92 near term," Danske notes.
"Still, looking further down the road, we expect the parties to reach a deal eventually as we get closer to the deadline, which would send EUR/GBP down again. We would prefer to express our tactical bearish GBP view via options, which we believe would allow for attractive risk-reward,"
According to provisional data from Federal Statistical Office (Destatis), turnover in retail trade in April 2020 was in real terms 6.5% and in nominal terms 5.3% lower than in April 2019. Economists had expected a 12% decrease. The number of days open for sale was 24 in April 2020 and in April 2019. When adjusted for calendar and seasonal variations, the April 2020 turnover was in real terms 5.3% and in nominal terms 5.1% lower than in March 2020.
Separate report from Destatis showed that the index of import prices decreased by 7.4% in April 2020 compared with the corresponding month of the preceding year. This has been the highest price decrease compared to the previous year since October 2009 (-8.1%). In March 2020 and in February 2020 the annual rates of change were -5.5% and -2.0%, respectively. From March 2020 to April 2020 the index fell by 1.8%.
The index of import prices, excluding crude oil and mineral oil products, decreased in April 2020 by 2.6% compared with April 2019 and in comparison with March 2020 it fell by 0.6%.
The index of export prices decreased by 1.1% in April 2020 compared with the corresponding month of the preceding year. This has been the highest price decrease compared to the previous year since August 2016 (-1.1%). In March 2020 and in February 2020 the annual rates of change were -0.5% and +0.3%, respectively. From March 2020 to April 2020 the index fell by 0.4%.
CNBC reports that the U.S. death toll from the coronavirus passed 100,000 late Wednesday, far exceeding reported deaths in every other country. Black Americans made up a disproportionately large share of the deaths, according to an analysis of data from the Centers for Disease Control and Prevention.
At China’s annual parliamentary meeting, its Premier Li Keqiang said that China would open its markets even further to foreign businesses, in the aftermath of the coronavirus impact to the global economy.
San Francisco issued new guidelines for reopening some businesses in the city while New York Gov. Andrew Cuomo said businesses in New York state are allowed to deny entry to those who do not wear masks or face coverings.
Global cases: More than 5.71 million
Global deaths: At least 356,124
U.S. cases: More than 1.69 million
U.S. deaths: At least 100,442
Resistance levels (open interest**, contracts)
Price at time of writing this review: $1.1107
Support levels (open interest**, contracts):
- Overall open interest on the CALL options and PUT options with the expiration date June, 5 is 93888 contracts (according to data from May, 28) with the maximum number of contracts with strike price $1,0700 (5303);
Resistance levels (open interest**, contracts)
Price at time of writing this review: $1.2349
Support levels (open interest**, contracts):
- Overall open interest on the CALL options with the expiration date June, 5 is 23760 contracts, with the maximum number of contracts with strike price $1,3500 (3420);
- Overall open interest on the PUT options with the expiration date June, 5 is 30064 contracts, with the maximum number of contracts with strike price $1,3500 (3095);
- The ratio of PUT/CALL was 1.27 versus 1.26 from the previous trading day according to data from May, 28
* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.
** - Open interest takes into account the total number of option contracts that are open at the moment.
|01:30||Australia||Private Sector Credit, y/y||April||3.6%|
|01:30||Australia||Private Sector Credit, m/m||April||1.1%|
|05:00||Japan||Construction Orders, y/y||April||-14.3%|
|05:00||Japan||Housing Starts, y/y||April||-7.6%||-12.1%|
|06:00||United Kingdom||Nationwide house price index, y/y||May||3.7%||2.8%|
|06:00||United Kingdom||Nationwide house price index||May||0.7%||-1%|
|06:00||Germany||Retail sales, real adjusted||April||-5.6%||-12%|
|06:00||Germany||Retail sales, real unadjusted, y/y||April||-2.8%||-14.3%|
|06:45||France||GDP, q/q||Quarter I||-0.1%||-5.8%|
|07:00||Switzerland||KOF Leading Indicator||May||63.5||70|
|08:00||Eurozone||Private Loans, Y/Y||April||3.4%|
|08:00||Eurozone||M3 money supply, adjusted y/y||April||7.5%||7.8%|
|09:00||Eurozone||Harmonized CPI, Y/Y||May||0.3%||0.1%|
|09:00||Eurozone||Harmonized CPI ex EFAT, Y/Y||May||0.9%||0.8%|
|12:30||Canada||Industrial Product Price Index, y/y||April||-2.4%|
|12:30||Canada||Industrial Product Price Index, m/m||April||-0.9%|
|12:30||U.S.||Goods Trade Balance, $ bln.||April||-64.38|
|12:30||U.S.||PCE price index ex food, energy, m/m||April||-0.1%||-0.3%|
|12:30||U.S.||PCE price index ex food, energy, Y/Y||April||1.7%||1.1%|
|12:30||U.S.||Personal Income, m/m||April||-2%||-6.5%|
|12:30||Canada||GDP (YoY)||Quarter I||0.3%||-10%|
|12:30||Canada||GDP QoQ||Quarter I||0.1%|
|13:45||U.S.||Chicago Purchasing Managers' Index||May||35.4||40|
|14:00||U.S.||Reuters/Michigan Consumer Sentiment Index||May||71.8||74|
|15:00||U.S.||Fed Chair Powell Speaks|
|17:00||U.S.||Baker Hughes Oil Rig Count||May||237|
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