CFD Markets News and Forecasts — 15-05-2020

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15.05.2020
20:00
U.S.: Net Long-term TIC Flows , March -112.6
20:00
U.S.: Total Net TIC Flows, March 349.9
19:35
Key events for next week: UK unemployment rate, UK, Canada and Japan consumer price index, FOMC meeting minutes, Eurozone, UK and United States PMI's.

On Monday, at 04:30 GMT, Japan will publish the index of activity in the service sector for March. Also on Monday Eurogroup meeting will take place. At 10:00 GMT in Germany, the Bundesbank monthly report will be released. At 14:00 GMT, the US will present the NAHB housing market index for May. At 22:45 GMT, New Zealand will release the producer price index for the 1st quarter.

On Tuesday, at 01:30 GMT in Australia, the RBA Meeting's Minutes will be released. At 04:30 GMT Japan will report the change in the volume of industrial production for March. At 06:00 GMT, UK will report changes in claimant count for April, as well as the unemployment rate and average earnings for March. At 09:00 GMT, Germany and the Euro zone will publish the ZEW index of business sentiment for May. Also on Tuesday, there will be a meeting of the Ministers of economy and Finance (ECOFIN). At 12:30 GMT, the US will report changes in building permits and housing starts for April. At 14:00 GMT Fed Chairman Powell will give a speech. At 22:45 GMT, New Zealand will announce changes in food prices for April. At 23:50 GMT, Japan will announce a change in core machinery orders for March.

On Wednesday. at 00:30 GMT, Australia will release the leading index for April. At 06:00 GMT, UK will publish the consumer price index, retail price index, producer purchasing price index and producer selling price index for April. At 08:00 GMT, the Euro zone will announce a change in the balance of payments for March. At 09:00 GMT, the Euro zone will present the consumer price index for April. At 12:30 GMT, Canada will release the consumer price index for April and report changes in wholesale trade for March. At 14:00 GMT, the Euro zone will publish a consumer confidence indicator for May. At 14:30 GMT, the US will report changes in oil reserves according to the Ministry of energy. At 18:00 GMT in the US, the FOMC meeting minutes will be published. At 23:50 GMT, Japan will announce a change in the foreign trade balance for April.

On Thursday. initially, the focus will be on the service sector PMI and manufacturing PMI for May: Japan will report at 00:30 GMT, and UK - at 08:30 GMT. At 10:00 GMT, UK will release the balance of industrial orders according to the Confederation of British Industrialists for May. At 12:30 GMT, Canada will publish the new home price index for April. Also at 12: 30 GMT, the US will present the Philadelphia Fed's manufacturing index for May and announce changes in the initial jobless claims. At 13: 45 GMT, the US will release the services PMI and manufacturing PMI for May. At 14: 00 GMT, the US will announce changes in existing home sales for April and publish leading indicators for April. At 18:30 GMT, Fed Chairman Powell will give a speech. At 22:45 GMT, New Zealand will report changes in retail sales for the 1st quarter. At 23:30 GMT, Japan will present the consumer price index for April.

On Friday, at 06:00 GMT, UK will report changes in net public sector debt and retail trade for April. Then the focus will be on the service sector PMI and manufacturing PMI for May: France will report at 07:15 GMT, Germany at 07: 30 GMT, and the Eurozone at 08:00 GMT. At 12:30 GMT, Canada will report changes in retail sales for March. At 17:00 GMT the US will release a Baker Hughes report on the number of active oil rigs.

19:00
DJIA +0.08% 23,644.87 +19.53 Nasdaq +0.25% 8,965.73 +22.01 S&P -0.02% 2,851.91 -0.59
17:01
U.S.: Baker Hughes Oil Rig Count, May 258
16:00
European stocks closed: FTSE 100 5,800.33 +58.79 +1.02% DAX 10,465.17 +128.15 +1.24% CAC 40 4,277.63 +4.50 +0.11%
15:02
U.S.: April data exceptionally soft – NBF

FXStreet reports that Krishen Rangasamy from the National Bank of Canada (NBF) notes that government-mandated lockdowns kept American consumers at home during April, and brick-and-mortar retailers reeling.

“The US Census Bureau confirmed this morning the damage was more significant than expected as total retail sales plunged a record 16.4% in April, and that after an 8.3% decline the prior month.” 

“A rebound can be expected for brick-and-mortar retailers in May considering some states eased lockdowns during that month, but don’t expect all losses of the prior two months to be recouped.” 

“April’s decline for retail sales and industrial production (-11% month on month, also reported this morning) are much in line with our view US real GDP will contract more than 30% annualized in Q2.”

14:41
White House economic advisor Kudlow: Cutting the corporate tax rate in half for companies moving production back to the U.S. is something to look at - Fox Business

  • U.S economy still in freefall from pandemic shutdown
  • In a few weeks, perhaps White House will negotiate on economic relief package
  • Economic relief must focus on incentives such as payroll tax cuts
  • No coronavirus relief package should go through without some form of liability protection

14:33
U.S. job openings decrease 11.6 percent in March

The Job Openings and Labor Turnover Survey (JOLTS) published by the Labor Department on Friday revealed an 11.6 percent m-o-m drop in the U.S. job openings in March after a revised 0.1 percent m-o-m decline in February (originally a 1.9 percent m-o-m decrease).

According to the report, employers posted 6.191 million job openings in March (the lowest level since May 2017) compared to the February figure of 7.004 million (revised from 6.882 million in original estimate) and economists' expectations of 5.800 million. The job openings rate was 3.9 percent in March, down from a revised 4.4 percent in the prior month (originally, 4.3 percent). The report showed that the job openings decreased in total private (-774,000 jobs), with the largest declines in accommodation and food services (-258,000) and durable goods manufacturing (-82,000).

Meanwhile, the number of hires fell by 11.2 percent m-o-m to 5.206 million in March from a revised 5.864 in February. The hiring rate decreased to 3.4 percent in March from a revised 3.8 percent in February. The hires level dropped for total private (-654,000) and was little changed for government. Hires decreased in accommodation and food services (-344,000), health care and social assistance (-87,000), and durable goods manufacturing (-33,000), but increased in federal government (+8,000).

The separation rate in March was 14.517 million or 9.6 percent, compared to 5.595 million or 3.7 percent in February. Within separations, the quits rate was 1.8 percent (-0.5 pp m-o-m), and the layoffs rate was 7.5 percent (+6.3 pp m-o-m).

14:11
U.S. business inventories decrease 0.2 percent in March

The Commerce Department announced on Friday that business inventories fell 0.2 percent m-o-m in March, following a revised 0.5 percent m-o-m decline in February (originally, a drop of 0.4 percent m-o-m).

That was in line with economists' forecast for a 0.2 percent m-o-m decrease.

According to the report, stocks at wholesalers and manufacturers fell 0.8 percent m-o-m each in March, while those at retailers rose 1.0 percent m-o-m.

In y-o-y terms, business inventories edged down 0.3 percent in March.

14:06
U.S. consumer sentiment index unexpectedly increases in early May

A report from the University of Michigan revealed on Friday the preliminary reading for the Reuters/Michigan index of consumer sentiment rose to 73.7 in early May.

Economists had expected the index would decrease to 68.0 this month from April's final reading of 71.8.

According to the report, the index of current U.S. economic conditions increased to 83.0 in May from 74.3 in the previous month. Meanwhile, the index of consumer expectations fell to 67.7.0 this month from 70.1 in April.

The report noted that confidence inched upward in early May as the CARES relief checks improved consumers' finances and widespread price discounting boosted their buying attitudes. However, personal financial prospects for the year ahead continued to weaken, falling to the lowest level in almost six years, with declines especially sharp among upper-income households.

14:00
U.S.: Reuters/Michigan Consumer Sentiment Index, May 73.7 (forecast 68)
14:00
U.S.: Business inventories , March -0.2% (forecast -0.2%)
14:00
U.S.: JOLTs Job Openings, March 6.191
13:53
Manufacturing activity in the New York region continues to deteriorate in May

The report from the New York Federal Reserve showed on Friday that manufacturing activity in the New York region continued to deteriorate significantly in early May.

According to the survey, NY Fed Empire State manufacturing index rose from record low -78.2 in April to -48.5 in May, but remained well below zero. That was the second-worst reading in the survey's history.

Economists had expected the index to come in at -63.5

Anything below zero signals contraction.

According to the report, new orders and shipments continued to decrease sharply, though not as steeply as in April. Meanwhile, employment fell somewhat further in May after plunging last month. Elsewhere, delivery times were slightly shorter than last month, and inventories were slightly lower. On the price front, the prices paid index indicated modest selling price increases, while the prices received index pointed to a second consecutive monthly decline in selling prices.

13:34
U.S. Stocks open: Dow -0.64%, Nasdaq -0.93%, S&P -0.80%
13:32
U.S. industrial production plunges slightly less than forecast in April

The Federal Reserve reported on Friday the U.S. industrial production reduced 11.2 m-o-m in April, following a revised 4.5 percent m-o-m decline in March (originally a 5.4 percent m-o-m drop). That was the largest drop in the 101-year history of the index.

Economists had forecast industrial production would plunge 11.5 percent m-o-m in April.

According to the report, the COVID-19 pandemic led many factories to slow or suspend operations throughout the month. Manufacturing output fell 13.7 percent m-o-m, its largest decline on record, as all major industries recorded decreases, with motor vehicles and parts posting a 70 percent decline, while production elsewhere in manufacturing fell 10.3 percent. In addition, the indexes for utilities and mining dropped 0.9 percent and 6.1 percent, respectively.

Capacity utilization for the industrial sector decreased 8.3 percentage points m-o-m to 64.9 percent in April. That was 0.9 percentage point above economists' forecast but 14.9 percentage points below its long-run (1972-2019) average.

In y-o-y terms, the industrial output fell 15.0 percent in April, following a revised 4.9 percent decrease in the prior month (originally, -5.5 percent). That was the biggest decline since June 2009.

13:19
Before the bell: S&P futures -0.96%, NASDAQ futures -1.36%

U.S. stock-index futures fell on Friday as investors digested record declines in the U.S. retail sales and industrial production in April, while tensions between the U.S. and China continued to escalate.


Global Stocks:

Index/commodity

Last

Today's Change, points

Today's Change, %

Nikkei

20,037.47

+122.69

+0.62%

Hang Seng

23,797.47

-32.27

-0.14%

Shanghai

2,868.46

-1.88

-0.07%

S&P/ASX

5,404.80

+76.10

+1.43%

FTSE

5,779.63

+38.09

+0.66%

CAC

4,266.24

-6.89

-0.16%

DAX

10,412.64

+75.62

+0.73%

Crude oil

$28.77


+4.39%

Gold

$1,752.70


+0.68%

13:15
U.S.: Industrial Production YoY , April -15%
13:15
U.S.: Industrial Production (MoM), April -11.2% (forecast -11.5%)
13:15
U.S.: Capacity Utilization, April 64.9% (forecast 64%)
13:04
White House trader adviser Navarro says US caught China "red handed" trying to steal intellectual property for vaccine development, and that is "red line" - Fox Business
13:02
Wall Street. Stocks before the bell

(company / ticker / price / change ($/%) / volume)


3M Co

MMM

135.36

-0.63(-0.46%)

17937

ALCOA INC.

AA

6.74

-0.07(-1.03%)

42297

ALTRIA GROUP INC.

MO

36.2

-0.05(-0.14%)

12888

Amazon.com Inc., NASDAQ

AMZN

2,372.50

-16.35(-0.68%)

31344

American Express Co

AXP

82.7

-1.11(-1.32%)

20495

AMERICAN INTERNATIONAL GROUP

AIG

25.5

-0.26(-1.01%)

3713

Apple Inc.

AAPL

301.6

-7.94(-2.57%)

1012900

AT&T Inc

T

28.44

-0.14(-0.49%)

49152

Boeing Co

BA

119.3

-3.22(-2.63%)

477785

Caterpillar Inc

CAT

104

-2.19(-2.06%)

203195

Chevron Corp

CVX

89.5

-0.55(-0.61%)

12012

Cisco Systems Inc

CSCO

42.79

-1.06(-2.42%)

360954

Citigroup Inc., NYSE

C

41.5

-0.56(-1.33%)

141980

E. I. du Pont de Nemours and Co

DD

45.37

0.12(0.27%)

805

Exxon Mobil Corp

XOM

42.11

-0.19(-0.45%)

47324

Facebook, Inc.

FB

205.1

-1.71(-0.83%)

87975

FedEx Corporation, NYSE

FDX

106.98

-2.13(-1.95%)

7646

Ford Motor Co.

F

4.85

-0.04(-0.82%)

261172

Freeport-McMoRan Copper & Gold Inc., NYSE

FCX

8.21

-0.08(-0.97%)

41789

General Electric Co

GE

5.64

-0.06(-1.05%)

546614

General Motors Company, NYSE

GM

21.86

-0.45(-2.02%)

69833

Goldman Sachs

GS

172.92

-1.53(-0.88%)

4571

Google Inc.

GOOG

1,350.48

-5.65(-0.42%)

4994

Hewlett-Packard Co.

HPQ

14.32

-0.19(-1.31%)

8000

Home Depot Inc

HD

232.55

-1.93(-0.82%)

10469

Intel Corp

INTC

57.8

-1.28(-2.17%)

179946

International Business Machines Co...

IBM

116.25

-0.70(-0.60%)

9407

International Paper Company

IP

31

-0.57(-1.81%)

1701

Johnson & Johnson

JNJ

147.4

-0.24(-0.16%)

32459

JPMorgan Chase and Co

JPM

86.6

-0.92(-1.05%)

102011

McDonald's Corp

MCD

175.31

-0.10(-0.05%)

10649

Microsoft Corp

MSFT

178.9

-1.63(-0.90%)

238468

Nike

NKE

84.78

-1.77(-2.05%)

42110

Pfizer Inc

PFE

37.79

-0.13(-0.35%)

23405

Procter & Gamble Co

PG

113.6

-0.21(-0.18%)

49839

Starbucks Corporation, NASDAQ

SBUX

73

-1.19(-1.60%)

27884

Tesla Motors, Inc., NASDAQ

TSLA

788.6

-14.73(-1.83%)

176898

The Coca-Cola Co

KO

43.6

-0.10(-0.23%)

27369

Twitter, Inc., NYSE

TWTR

28.16

-0.40(-1.40%)

188881

UnitedHealth Group Inc

UNH

289.4

-1.21(-0.42%)

2613

Verizon Communications Inc

VZ

54.86

-0.05(-0.09%)

10586

Visa

V

179.2

-1.70(-0.94%)

520355

Wal-Mart Stores Inc

WMT

123.34

-0.08(-0.06%)

8137

Walt Disney Co

DIS

104.7

-1.21(-1.14%)

88686

Yandex N.V., NASDAQ

YNDX

38.56

-0.27(-0.70%)

1973

12:44
China: Cautious consumers constraining the economy recovery – NBF

FXStreet reports that analysts at the National Bank of Canada (NBF) suggest that the latest economic data from China continues to highlight some challenges in its recovery phase – with consumer trends remaining weak and export markets looking constrained going forward.

“Our forecasts are unchanged – with economic growth of 1.0% in 2020 (the weakest growth rate since 1976), before increasing by 9.75% in 2021.”

“China’s industrial production increased in April – up by 3.9% yoy (compared with a 1.1% yoy fall previously). It is worth noting that this increase was far below the typical pre-COVID-19 rates.”

“China’s trade balance widened in April – totalling US$45.3 billion (from US$19.9 billion in March). Exports rose strongly month-on-month, while imports declined, even as a wider range of countries imposed COVID-19 countermeasures.”

“China’s retail sales continued to fall in April – down by 7.5% yoy (from -15.8% yoy in March).”

12:39
U.S. retail sales plunge more than expected in April

The Commerce Department announced on Friday the sales at U.S. retailers plummeted 16.4 percent m-o-m in April, following a revised 8.3 percent m-o-m plunge in March (originally an 8.4 percent m-o-m tumble). That was the biggest monthly plunge on record.

Economists had expected total sales would tumble 12.0 percent m-o-m in April.

According to the report, sales of clothing and accessories, electronics, and at gasoline stations recorded the biggest declines.

Excluding auto, retail sales dropped 17.2 percent m-o-m in April after a revised 4.0 percent m-o-m decline in the previous month (originally a 4.2 percent m-o-m fall), much worse than economists' forecast of an 8.6 percent m-o-m fall.

In y-o-y terms, the U.S. retail sales declined 21.6 percent in April, following a revised 5.7 decrease in the previous month (originally a 5.8 percent drop).

12:31
Canada: Foreign Securities Purchases, March -9.78
12:31
U.S.: Retail Sales YoY, April -21.6%
12:30
U.S.: Retail sales, April -16.4% (forecast -12%)
12:30
U.S.: Retail sales excluding auto, April -17.2% (forecast -8.6%)
12:30
U.S.: NY Fed Empire State manufacturing index , May -48.5 (forecast -63.5)
12:17
European session review: USD strengthens as escalating U.S.-China tensions heighten risk aversion

Time Country Event Period Previous value Forecast Actual
08:00 Germany GDP (QoQ) Quarter I -0.1% -2.2% -2.2%
08:00 Germany GDP (YoY) Quarter I 0.4% -2% -2.3%
09:00 Eurozone Employment Change Quarter I 0.3% -0.4% -0.2%
09:00 Eurozone Trade balance unadjusted March 23.7 28.2
09:00 Eurozone GDP (YoY) Quarter I 1% -3.3% -3.2%
09:00 Eurozone GDP (QoQ) Quarter I 0.1% -3.8% -3.8%


USD rose slightly against most other major currencies in the European session on Friday as tensions between Washington and Beijing continued escalating, heightening risk aversion. However, the U.S. currency fell against JPY.

Reuters reported that White House planned to restrict Chana's Huawei Technologies from acquiring semiconductors from U.S. chipmakers. According to the report, the U.S. Commerce Department said it was amending an export rule to "strategically target Huawei's acquisition of semiconductors that are the direct product of certain U.S. software and technology." The department also added the "announcement cuts off Huawei's efforts to undermine U.S. export controls." The report also said that the U.S. Commerce Department extended a temporary license that was set to expire tonight at midnight to allow U.S. companies to continue doing business with Huawei through August 13, but warned that this would be the final extension.

Meanwhile, China's Global Times editor-in-chief tweeted that "if the U.S. further blocks key technology supply to Huawei, China will activate the "unreliable entity list", restrict or investigate US companies such as Qualcomm, Cisco and Apple, and suspend the purchase of Boeing airplanes".

Worries about global economic recovery also continued to weigh on market sentiment. Most countries that have eased their COVID-19 restrictions recorded increases in new cases. This dented investors' optimism that major economies could quickly return to "normal".

Traders are also awaiting a raft of important U.S. macro data, including retail sales (12:30 GMT), industrial output (13:15 GMT) and Reuters/Michigan consumer sentiment index (14:00 GMT).

12:03
EU's chief Brexit negotiator: UK refuses to engage in full conversation on level-playing field

  • Our positions with UK are extremely divergent
  • We haven't made progress on governance of a deal with UK
  • The negotiating round this week was disappointing

12:01
UK's chief Brexit negotiator Frost: Need a change in EU approach for next round of negotiations

  • We have made very little progress towards Brexit agreement
  • There is clearly a good understanding between negotiators
  • But major obstacle is EU's insistence of so-called "level playing field"
  • Intend to make public draft legal texts next week

11:43
No fall in interest rates after the coronavirus crisis – Natixis

FXStreet reports that according to Natixis, as interest rates have already reached a floor, they cannot fall any further: the shock of the coronavirus crisis cannot be cushioned by a fall in interest rates.

“If interest rates - unlike what happened after the subprime crisis - cannot fall, the only solution to respond to the crisis is the one that has actually been used: a very expansionary fiscal policy with full monetisation of fiscal deficits.” 

“Fiscal policy is necessarily more expansionary than after the subprime crisis, since interest rates cannot fall any further this time around. Monetisation prevents the crowding out effects and the rise in long-term interest rates that would result from the huge fiscal deficit (and the increase in corporate debt) if central banks had not bought the issued bonds.”

11:01
AUD/USD: Consolidation in the next quarter - Danske Bank

FXStreet reports that economists at Danske Bank expect some consolidation on the AUD/USD pair though there are some risks to the upside. 

“We keep our short-term forecast at 0.60, which remains below the current spot level.”

“We generally think AUD is getting somewhat ahead of where fundamentals anchor the spot and thus expect some consolidation on 1M and 3M.”

“Key upside risks include a decline in broad dollar (not our base case) and upside in the prices of industrial metals.”

10:49
Australia: Labour statistics mask more than they reveal – Standard Chartered

FXStreet reports that economists at Standard Chartered Bank believe the true health of the Australian labour market is significantly worse than the rise in the headline unemployment rate indicates. 

“Despite the loss of 594,300 jobs in April, the unemployment rate rose only marginally to 6.2%, aided by a significant drop in the participation rate to 63.5% from 66% in March.” 

“We estimate that the true unemployment rate was close to 18.8%.” 

“We expect the unemployment rate to peak at c.12% in June.”

10:43
Company News: Applied Materials (AMAT) quarterly results match analysts' estimates

Applied Materials (AMAT) reported Q2 FY 2020 earnings of $0.89 per share (versus $0.70 per share in Q2 FY 2019), in line with analysts' consensus estimate.

The company's quarterly revenues amounted to $3.957 bln (+11.8% y/y), roughly in line with analysts' consensus estimate of $3.976 bln.

AMAT rose to $56.35 (+3.53%) in pre-market trading.

10:36
USD/JPY: 110 is seen as a short-term ceiling - Danske Bank

FXStreet reports that according to analysts at Danske Bank, the second half of 2020 continues to be the time when USD/JPY could move slightly higher.

“We continue to expect 112 in 6M and 12M, which still reflects our view of a strong USD.” 

“Near-term, we see USD/JPY as trading in the 107-110 range.”

10:35
Company News: JD.com (JD) quarterly earnings miss analysts’ forecast

JD.com (JD) reported Q1 FY 2020 earnings of RMB0.28 per share (versus RMB2.23 per share in Q1 FY 2019), missing analysts' consensus estimate of RMB0.63 per share.

The company's quarterly revenues amounted to RMB146.200 bln (+20.7% y/y), beating analysts' consensus estimate of RMB136.628 bln.

The company also issued upside guidance for Q2 FY 2020, projecting revenues of RMB180-195 bln versus analysts' consensus estimate of RMB 176.51 bln.

JD rose to $50.50 (+3.15%) in pre-market trading.

10:17
GBP/USD: Heading below 1.2000 – MUFG

GBP/USD: Heading below 1.2000 – MUFG

FXStreet reports that analysts at MUFG Bank remain bearish on the pound and see increased prospects of a decline below the 1.2000 level versus the dollar.

“There is an increasing risk that investors view the outlook for the UK more negatively relative to elsewhere, thus encouraging increased speculative selling.”

“Growth may have contracted by around 15% in Q2, with downside risks given a tighter lockdown is set to continue longer in the UK than elsewhere. That’s looking like the UK will be on the worse end of hits to real economic growth.”

“The UK’s current account deficit leaves GBP more vulnerable. Amongst G10 countries, the UK is currently running the worst current account balance.”

“We see a test and breach of the 1.2000 level in GBP/USD as a likely prospect over the short-term.”

10:03
German interior ministry's spokesman: Germany to loosen quarantine restrictions for arriving travelers from EU, Schengen Area, UK

  • Border controls will start to be relaxed from tomorrow but depending on local regulations

09:56
USD/CAD: Reopening to lower the pair - Danske Bank

UFXStreet notes that  SD/CAD has been fluctuating around the 1.40 level as the impact of higher oil has been offset by USD strength. Economists at Danske Bank see the pair trading lower in the coming months.

“We still pencil in a lower cross as the reopening of the global economy contributes to stabilising commodity imbalances.” 

“We forecast USD/CAD at 1.40 in 1M, 1.38 in 3M, 1.37 in 6M and 1.35 in 12M.”

09:41
Eurozone’s goods trade balance records EUR28.2 bln surplus in March

Eurostat, the statistical office of the European Union (EU), announced on Friday that Eurozone's exports dropped by 6.2 percent y-o-y to EUR193.3 billion in March, while its imports plunged 10.1 percent y-o-y to EUR165.0 billion. As a result, the Eurozone recorded a EUR28.2 billion surplus in trade in goods with the rest of the world in March, compared with a surplus of EUR23.7 billion in the previous month and EUR22.7 billion in March 2019.

The report noted that the COVID-19 containment measures widely introduced by the Member States had a significant impact on international trade in goods in March.

In the first quarter of 2020, Eurozone exports of goods reduced 1.8 percent y-o-y to EUR566.0 billion, while its imports fell 4.1 percent y-o-y to EUR512.3 billion, resulting in a surplus of EUR53.7 billion compared with a EUR41.7-billion surplus in the first quarter of 2019.

09:20
Eurozone’s GDP decreases 3.8 percent in Q1, while employment drops 0.2 percent

Eurostat, the statistical office of the European Union (EU), reported on Friday its second estimates showed that Eurozone GDP fell by 3.8 percent q-o-q in the first quarter of 2020, unchanged from the previous estimates. That was the steepest drop observed since time series started in 1995. In the fourth quarter of 2019, the GDP rose by 0.1 percent q-o-q.

In y-o-y terms, Eurozone's economy decreased by 3.3 percent in the first quarter compared to -3.3 percent in the previous estimate and +1.0 percent in the prior three-month period. That was the sharpest decline since the third quarter of 2009.

Economists had forecast that both final quarterly and annual rates of the GDP growth would be left unrevised.

The report noted that the Member States began to introduce widely COVID-19 containment measures in March, the final month of the period covered. Among the bloc's largest economies, Germany (-2.2 percent q-o-q), France (-5.8 percent q-o-q), Spain (-5.2 percent q-o-q) and Italy (-4.7 percent q-o-q) shrank the most on record.

The report also revealed that employment in Eurozone in the first quarter decreased by 0.2 percent q-o-q, recording its first decline since the second quarter of 2013, but increased 0.3 percent y-o-y. In the previous quarter, the number of persons employed rose 0.3 percent q-o-q and 1.1 percent y-o-y. Economists had forecast a 0.4 percent q-o-q drop and a 0.2 percent y-o-y gain for the first quarter.

09:01
Eurozone: Employment Change, Quarter I -0.2% (forecast -0.4%)
09:00
Eurozone: GDP (QoQ), Quarter I -3.8% (forecast -3.8%)
09:00
Eurozone: Trade balance unadjusted, March 28.2
09:00
Eurozone: GDP (YoY), Quarter I -3.2% (forecast -3.3%)
08:38
Precious Metals: Rising trade tension supported the safe-haven buying – ANZ

FXStreet reports that ongoing concerns about global economic growth continue to drive safe-haven demand in precious metals, strategists at ANZ Bank apprise.

"The higher-than-expected rise in initial jobless claims in the US set a sombre mood, with investors piling into US treasuries. The yield on a US 10y bond fell to 0.62%, increasing investor appetite for gold."

"US President Trump said he doesn't want to talk to Chinese President Xi, and mused about eliminating the largest trading partnership in the world."

"Palladium prices rose sharply, despite warnings of significant demand destruction. Russian producer, Nornickel, suggested demand may drop 16% this year, the largest contraction since 2001. The company had been forecasting an increase of 2%."

08:19
Germany's GDP fell by 2.3% year on year in the first quarter

According to the report from Federal Statistical Office (Destatis), the corona pandemic hits the German economy hard. Although the spread of the coronavirus did not have a major effect on the economic performance in January and February, the impact of the pandemic is serious for the 1st quarter of 2020. The gross domestic product (GDP) was down by 2.2% on the 4th quarter of 2019 upon price, seasonal and calendar adjustment. That was the largest decrease since the global financial and economic crisis of 2008/2009 and the second largest decrease since German unification. A larger quarter-on-quarter decline was recorded only for the 1st quarter of 2009 (-4.7%).

Household final consumption expenditure fell sharply in the 1st quarter of 2020. Gross fixed capital formation in machinery and equipment decreased considerably, too. However, final consumption expenditure of general government and gross fixed capital formation in construction had a stabilising effect and prevented a larger GDP decrease. Both exports and imports saw a strong decline on the 4th quarter of 2019.

Economic performance slumped heavily also in a year-on-year comparison. The GDP in the 1st quarter of 2020 was down a price-adjusted 1.9%, and a calendar-adjusted 2.3%, on a year earlier. Only in the years of the financial and economic crisis of 2008/2009 had there been larger decreases on the relevant quarter of the preceding year. The largest decrease (-7.9%) had been recorded for the 2nd quarter of 2009 (in calendar-adjusted terms for the 1st quarter of 2009 (-6.9%)).

08:00
Germany: GDP (YoY), Quarter I -2.3% (forecast -2%)
08:00
Germany: GDP (QoQ), Quarter I -2.2% (forecast -2.2%)
07:39
Oil market is re-balancing, but path to ‘next normal’ not a straight line, says energy CEO

CNBC reports that oil markets are re-balancing after a collapse in demand following the coronavirus outbreak but the pathway to "the next normal" is still very uncertain, the CEO of Abu Dhabi's National Oil Company (ADNOC) said.

"There are good signs that the market has tightened in recent weeks and the OPEC++ agreement, voluntary cuts outside of OPEC and the production shut-ins are working together to start to rebalance the market," UAE Minister of State and ADNOC Group CEO Dr Sultan Al Jaber said, alluding to a group of countries that includes OPEC members and other systemically important producers such as Russia.

"As economies begin to open up, demand will follow, but the path to the next normal will not be a straight line," he added. Al Jaber was speaking to Helima Croft, Managing Director and Global Head of Commodity Strategy at RBC Capital Markets.

The coronavirus pandemic has dealt a severe blow to economic activity around the globe and sent oil prices tumbling by over 50% so far this year. While OPEC and its oil-producing allies finalized a historic agreement last month to cut production by 9.7 million barrels per day beginning May 1, some experts reckon that the reduction in supply won't be enough to offset the diminution in demand.

07:20
Pressure building on the yuan ahead of key political meeting

Bloomberg reports that the recent calm in China's currency market is likely to be tested to the downside after the annual parliamentary meeting, which starts next week.

The yuan's 30-day moving average has been flat all month at around 7.077 per dollar, while volatility has plunged to the lowest since January. The central bank has repeatedly set the daily fixing stronger than expected this month, and banks have been seen buying the yuan, limiting losses past 7.1.

Chinese authorities have historically kept the nation's financial markets steady in the run-up to the important yearly event. Once the leash is loosened, market forces this year suggest renewed pressure on the yuan. The global recession is undercutting demand for Chinese products, while worsening tensions with the U.S. are casting doubt on the trade deal between the two nations.

The yuan will likely experience gradual depreciation after the National People's Congress, partly due to the weak outlook for exports, said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group Ltd.

He said he expected the yuan to weaken to 7.2 versus the greenback by the third quarter or possibly earlier. That would be a drop of about 1.5% from the current level.

The yuan has weakened 0.5% this month, extending its drop this year to nearly 2%.

07:07
Asian session review: the dollar was almost unchanged against the euro and yen.

Time Country Event Period Previous value Forecast Actual
02:00 China Retail Sales y/y April -15.8% -7% -7.5%
02:00 China Industrial Production y/y April -1.1% 1.5% 3.9%
02:00 China Fixed Asset Investment April -16.1% -10% -10.3%
06:00 Germany Producer Price Index (YoY) April -0.8% -1.8% -1.9%
06:00 Germany Producer Price Index (MoM) April -0.8% -0.6% -0.7%
06:45 France CPI, y/y April 0.7% 0.4% 0.3%
06:45 France CPI, m/m April 0.1% 0.1% 0%


During today's Asian trading, the US dollar changed slightly against the euro and yen after strengthening at the end of the previous session on the statements of US President Donald Trump that the United States needs a strong dollar to support the recovery of the economy after the current crisis.

In the summer of 2019, Trump's statements that too strong a dollar puts pressure on American companies and the economy, putting them at a disadvantage, caused traders to fear that the US may resort to intervention in the foreign exchange market in order to weaken the dollar.

The sharp change in Trump's position may indicate his recognition that fighting the market is a waste of time, experts say.

The ICE index, which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona), fell by 0.12%.

On signals that the Bank of England does not exclude the possibility of reducing the base rate to a negative level, the pound fell by 0.27% against the US dollar.

During a webinar organized by the Financial Times, the head of the Bank of England, Andrew Bailey, said that he considers it wise "never to rule anything out" when asked about the possibility of negative rates.

06:59
France consumer prices were stable over one month and increased by 0.3% year on year

According to the report from Insee, in April 2020, the Consumer Price Index (CPI) was stable over a month, after +0.1% in the previous month. Economists had expected a 0.1% increase. The drop in energy prices (−4.2% after −3.9%) was offset by the rebound in those of food prices (+1.8% after −0.1%). After a 0.2% drop in March, service prices were stable in April.

Those of manufactured products were unchanged too, after +1.4% in March. Finally, tobacco prices were stable over a month. Seasonally adjusted, consumer prices fell by 0.1% in April, after −0.6% in March.

Year on year, consumer prices slowed down for the third consecutive month, to +0.3%, after +0.7% in March. Economists had expected a 0.4% increase. The sharp drop in inflation came from an accentuation of the drop in the prices of energy and manufactured products and a slowdown in service and tobacco prices. Contrariwise, food prices gathered pace year on year.

Year on year, core inflation sharply fell in April: +0.3% after +0.7% in the previous month. The Harmonised Index of Consumer Prices (HICP) was stable over a month, after +0.1% in March; year on year, it slowed down for the third consecutive month, to +0.4%, after +0.8% in the previous month.

06:46
France: CPI, y/y, April 0.3% (forecast 0.4%)
06:46
France: CPI, m/m, April 0% (forecast 0.1%)
06:31
NZD/USD still looks to the 0.5920 area – UOB

FXStreet reports that NZD/USD's outlook remains on the bearish side, while a visit to 0.5920 should not be ruled out in the near-term, suggested FX Strategists at UOB Group.

24-hour view: "We highlighted the oversold conditions yesterday but held the view that 'there is room for another leg lower to 0.5960 first'. Our view was not wrong as NZD dropped to 0.5958 before rebounding quickly to end the day little changed at 0.5997 (+0.03%). Conditions remain oversold and this coupled with the bounce from the low indicates that an interim bottom could be in place. From here, the rebound could extend higher but an advance beyond 0.6050 appears unlikely. Support is at 0.5985 ahead of 0.5960 which is acting as a solid level now."

Next 1-3 weeks: "Yesterday, NZD dropped below the expected 0.6000/0.6130 consolidation range that we highlighted on Tuesday (12 May, spot at 0.6060). The rapid pick-up in momentum suggests further NZD weakness is likely towards 0.5920. At this stage, the prospect for a sustained decline below this strong support is not high. Overall, NZD is expected to trade on its back foot unless it can move back above 0.6085 ('strong resistance' level)."

06:15
Germany's producer price index fell more than forecast in April

According to the report from Federal Statistical Office (Destatis), in April 2020 the index of producer prices for industrial products decreased by 1.9% compared with the corresponding month of the preceding year. Economists had expected a 1.8% decrease. In March the annual rate of change all over had been -0.8%.

Compared with the preceding month March the overall index fell by 0.7% in April 2020 (-0.8% in March). Economists had expected a 0.6% decrease.

Energy prices as a whole decreased by 7.3% (-1.8% compared to March 2020). On an annual basis, prices of petroleum products were down 23.3%. They fell by 10.1% compared to March 2020. A great part of this decrease presumably is due to the fallen decline in demand during the Corona pandemic. Prices of natural gas (distribution) decreased by 13.0% whereas prices of electricity fell by 2.0%.

The overall index disregarding energy was 0.1% down on April 2019 and fell by 0.3% compared to March 2020.

Prices of intermediate goods decreased by 2.7% compared to April 2019 (-0.5% on March 2020). Prices of non-durable consumer goods increased by 2.8% compared to April 2019 (-0.2% on March 2020). Food prices were up 3.8% on April 2019.

06:00
Germany: Producer Price Index (YoY), April -1.9% (forecast -1.8%)
06:00
Germany: Producer Price Index (MoM), April -0.7% (forecast -0.6%)
05:57
Coronavirus: Germany reports 913 new cases; restaurants reopen in Australia’s biggest state
  • CNBC reports that Brazil's new high number of cases comes as its President Jair Bolsonaro pushed for lockdowns to be lifted in the financial center of Sao Paulo to soften the economic damage caused by restrictions

  • Americans shopped online and for groceries in April, avoiding many nonessential items as they stayed home during state shutdowns. Economists expect that drove April retail sales down 12%, the steepest decline since the data series began in 1992.

  • China's National Health Commission reported four new cases, all of which were locally transmitted infections.


  • Global cases: More than 4.4 million

  • Global deaths: At least 302,025

  • Most cases reported: United States (over 1.4 million), Russia (252,245), United Kingdom (234,439), Spain (229,540), Italy (223,096)

05:55
Options levels on friday, May 15, 2020 EURUSD GBPUSD

EUR/USD

Resistance levels (open interest**, contracts)

$1.0928 (1530)

$1.0894 (861)

$1.0865 (656)

Price at time of writing this review: $1.0806

Support levels (open interest**, contracts):

$1.0761 (1203)

$1.0745 (2261)

$1.0724 (2313)


Comments:

- Overall open interest on the CALL options and PUT options with the expiration date June, 5 is 88555 contracts (according to data from May, 14) with the maximum number of contracts with strike price $1,0600 (4423);


GBP/USD

Resistance levels (open interest**, contracts)

$1.2519 (1352)

$1.2436 (1200)

$1.2367 (648)

Price at time of writing this review: $1.2211

Support levels (open interest**, contracts):

$1.2129 (1217)

$1.2108 (1018)

$1.2064 (403)


Comments:

- Overall open interest on the CALL options with the expiration date June, 5 is 23506 contracts, with the maximum number of contracts with strike price $1,3500 (3410);

- Overall open interest on the PUT options with the expiration date June, 5 is 27546 contracts, with the maximum number of contracts with strike price $1,3500 (3095);

- The ratio of PUT/CALL was 1.17 versus 1.15 from the previous trading day according to data from May, 14

* - 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.

02:30
Commodities. Daily history for Thursday, May 14, 2020
Raw materials Closed Change, %
Brent 30.97 7.8
Silver 15.83 1.87
Gold 1729.807 0.86
Palladium 1835.4 0.4
02:00
China: Fixed Asset Investment, April -10.3% (forecast -10%)
02:00
China: Industrial Production y/y, April 3.9% (forecast 1.5%)
02:00
China: Retail Sales y/y, April -7.5% (forecast -7%)
00:30
Stocks. Daily history for Thursday, May 14, 2020
Index Change, points Closed Change, %
NIKKEI 225 -352.27 19914.78 -1.74
Hang Seng -350.56 23829.74 -1.45
KOSPI -15.46 1924.96 -0.8
ASX 200 -93.2 5328.7 -1.72
FTSE 100 -162.51 5741.54 -2.75
DAX -205.64 10337.02 -1.95
CAC 40 -71.82 4273.13 -1.65
Dow Jones 377.37 23625.34 1.62
S&P 500 32.5 2852.5 1.15
NASDAQ Composite 80.55 8943.72 0.91
00:30
Schedule for today, Friday, May 15, 2020
Time Country Event Period Previous value Forecast
02:00 China Retail Sales y/y April -15.8% -7%
02:00 China Industrial Production y/y April -1.1% 1.5%
02:00 China Fixed Asset Investment April -16.1% -10%
06:00 Germany Producer Price Index (YoY) April -0.8% -1.8%
06:00 Germany Producer Price Index (MoM) April -0.8% -0.6%
06:00 Germany GDP (QoQ) Quarter I 0% -2.2%
06:00 Germany GDP (YoY) Quarter I 0.4% -2%
06:45 France CPI, y/y April 0.7% 0.4%
06:45 France CPI, m/m April 0.1% 0.1%
09:00 Eurozone Employment Change Quarter I 0.3% -0.4%
09:00 Eurozone Trade balance unadjusted March 23
09:00 Eurozone GDP (YoY) Quarter I 1% -3.3%
09:00 Eurozone GDP (QoQ) Quarter I 0.1% -3.8%
12:30 Canada Foreign Securities Purchases March 20.61
12:30 U.S. NY Fed Empire State manufacturing index May -78.2 -63.5
12:30 U.S. Retail Sales YoY April -5.8%
12:30 U.S. Retail sales excluding auto April -4.2% -8.6%
12:30 U.S. Retail sales April -8.4% -12%
13:15 U.S. Capacity Utilization April 72.7% 64%
13:15 U.S. Industrial Production (MoM) April -5.4% -11.5%
13:15 U.S. Industrial Production YoY April -5.5%
14:00 U.S. JOLTs Job Openings March 6.882
14:00 U.S. Business inventories March -0.4% -0.2%
14:00 U.S. Reuters/Michigan Consumer Sentiment Index May 71.8 68
17:00 U.S. Baker Hughes Oil Rig Count May 292
20:00 U.S. Total Net TIC Flows March -13.4
20:00 U.S. Net Long-term TIC Flows March 49.4
00:15
Currencies. Daily history for Thursday, May 14, 2020
Pare Closed Change, %
AUDUSD 0.64625 0.15
EURJPY 115.853 0.04
EURUSD 1.08056 -0.12
GBPJPY 131.119 0.14
GBPUSD 1.223 -0.02
NZDUSD 0.6003 0.19
USDCAD 1.40398 -0.38
USDCHF 0.97295 0.09
USDJPY 107.21 0.16

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