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COVID-19 Remains the Key Driver, with UK and the U.S Stats also in Focus

Bob Mason

Earlier in the Day:

It was a relatively busy start to the day on the economic calendar on Thursday. The Kiwi Dollar, Aussie Dollar, and British Pound were in action in the early part of the day.

Outside of the numbers, the markets also responded to the latest COVID-19 figures.

On Wednesday, the total number of coronavirus cases across France, Germany, Italy, and Spain rose by 13,365 to 513,888. In the U.S, the total number of cases increased by 25,965 to 426,300. That took the total number of cases globally to 1,506,361.

Key take away from the numbers was a marked decline in the new of new cases amongst the 4 EU member states. On Wednesday, there were 13,365 new cases, which was down from 29,916 on Tuesday. Numbers from the U.S were also better, with the number of new cases down from 32,950 to 25,965.

For the Kiwi Dollar

Electronic card retail sales slid by 3.9% in March, month-on-month, reversing a 0.5% increase in February.

According to NZ Stats,

  • Spending on eating out and accommodation plunged by more than NZ$300m as a result of COVID-19 containment measures.
  • Groceries had record-high sales in March of NZ$376m, a rise of 17%.
  • Sales of clothes and shoes slumped by 31%, spending on fuel slid by 19%, with furniture, hardware & appliances seeing a 20% fall in sales.

The Kiwi Dollar moved from $0.60124 to $0.60139 upon release of the figures. At the time of writing, the Kiwi Dollar down by 0.12% to $0.6005.

For the Aussie Dollar

Through the early part of the day, the RBA released its Financial Stability Review that contained few, if any, positive takeaways. The spread and impact of the coronavirus was the main area of focus.

The Aussie Dollar moved from $0.62321 to $0.62084 upon release of the RBA’s Financial Stability Review. At the time of writing, the Aussie Dollar was down by 0.19% to $0.6218.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.12% to ¥108.96 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar, with Germany’s February trade figures in focus.

While we consider February numbers of little influence, today’s data will garner some interest. In February, we saw the supply chain broken, with worse to come in March, so we could get a sense of what’s to come.

Survey-based figures for March were dire, while February industrial production and factory orders were not as bad as forecasted.

We then saw a rebound in China’s private sector in March, though export demand continued to sag. All in all, a marked narrowing in the trade surplus could lead to a possible deficit in March…

Outside of the numbers, we expect that Wednesday’s coronavirus numbers will also influence. If we see a marked fall in the number of new cases the markets will likely brush aside the trade figures.

At the time of writing, the EUR was up by 0.03% at $1.0861.

For the Pound

It’s a particularly busy day ahead on the economic calendar.

Key stats include February Manufacturing and Industrial production and GDP numbers.

While the numbers are for February, expect the Pound to come under pressure if the stats disappoint. The markets are all too aware of what lies ahead in March and April. A dire February would almost assure a recession and the need for further support, both fiscal and monetary…

Expect February trade figures to have a muted impact, however.

Outside of the numbers, while the markets will consider the latest COVID-19 updates, Boris Johnson’s health may have greater influence.

At the time of writing, the Pound was up by 0.15% to $1.2401.

Across the Pond

It’s a relatively busy day ahead on the U.S economic calendar. Wholesale inflation figures for March are due out, along with April economic sentiment and the weekly jobless claims numbers.

Can the markets stomach another shock surge in initial jobless claims? Surely we won’t be seeing 6m plus numbers…

Economic sentiment figures are certainly up for a tumble, with wholesale inflationary pressures likely to ease.

Outside of the numbers, chatter from the Oval Office and the latest COVID-19 figures will also provide direction.

The Dollar Spot Index was down by 0.01% to 100.110 at the time of writing.

For the Loonie

It’s also a busier day ahead on the economic calendar, with March employment numbers in focus.

There are unlikely to be any positives for the markets to hold onto… Economists have forecast a 350k slump in employment and an unemployment rate of 7.2%.

An OPEC – Russia deal alone to scale back on production is not going to be enough. Trump is going to have to nudge shale producers to refuse oil dollars to also support the Loonie.

If the BoC thought it was done, the RBNZ’s message from Wednesday suggests that central bank action in March was just the beginning…

The Loonie was up by 0.09% at C$1.4025 against the U.S Dollar, at the time of writing.

This article was originally posted on FX Empire

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