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With plans about lifting the restriction measures starting to emerge and after a week of grim financial data, we enter the next week. A number of national governments seem to favour a more gradual approach, while others seem to be more under pressure due to the economic consequences which are expected to be severe. Please note that a number of analysts tend to expect the worse financial crisis since the great depression. Nevertheless, the situation seems to remain fragile and any uplifting of the market’s sentiment seems to be only of temporary nature at the current stage. Next week on the other hand, has a plethora of financial releases which could shake the markets. Skipping Monday with a rather light calendar, we move on to Tuesday when Germany’s ZEW economic sentiment for April is to be released, as well as the UK employment data for February. On Wednesday we get UK’s and Canada’s inflation measures for March, as well as Eurozone’s flash consumer confidence for April. On Thursday we expect the market’s attention to be focused on the preliminary PMIs for April of Germany, France, Eurozone, UK and US, as well as UK’s retail sales for March and the latest US initial jobless claims figure. On Friday we get Japan’s CPI rates for March as well as Germany’s Ifo Business Sentiment for April and the US durable goods rates for March.
USD – Safe haven flows move the greenback
It was characteristic of the US in the past few days how the greenback was moved by safe haven flows. Tuesday’s slight risk-on market sentiment tended to weaken it, while the sentiment reversed the following day, causing the dollar to rally across the board. It was characteristic how the rally was sparked after a series of record low readings surfaced for the US economy, forcing economists to forecast a deep recession coming. On the political theatre, president Trump froze the US funding of WHO, causing a backlash from the international community. Also, his plans for opening the US economy, citing signs that the outbreak is plateauing in parts of the country tends to create substantial worries. On the monetary front, conflicting statements from Fed officials about the recovery of the US economy, tended to create more confusion than clarity. We continue to see the Fed’s monetary stimulus as a factor supporting the US economy, while at the same time though, tends to weigh on the USD. As for financial releases next week, with the exception of the existing home sales for March on Tuesday, traders will have to wait until the last two days of the week. On Thursday we get the Initial Jobless claims for the latest week as well as the preliminary Markit PMIs for April. Both releases are to be about fresh data, for the present month and could gather interest for the USD. On Friday we get the US durable goods orders growth rates for March.
GBP – Financial data in focus
The pound seems to be relenting any gains it made in the past week against the USD, as the extension of UK’s lockdown comes into play. The possibility of a delayed return to normal life, until there is a functioning vaccine seems to be a one way direction for national governments. Despite the extension allready being priced in by pound traders probably, the economic outlook for the UK tends to worsen. Analysts tend to note that the early optimism of investors of a potential quick rebound of the UK economy may have been proven premature. It was characteristic that the UK economy could contract by 13%, expecting the deepest recession in three centuries, as UK budget forecasters stated on Tuesday. In the political theatre, Johnson’s government seems to be under increased pressure as healthworkers seem to be lacking protective gear for coronavirus. As for financial releases, pound traders are to have a heavy schedule for next week. Starting on Tuesday we get UK’s employment data for February. Despite February being considered a very distant past, as conditions have changed dramatically since then, the release could still gain on attention. On Wednesday, we get the main inflationery measures of the UK for March, while on Thursday the retail sales growth rates for March and the flash PMI reading of the services sector for April.
EUR – Preliminary PMI’s eyed
Ursula von der Leyen, the head of the EU Commission, seems to be setting the tone for the gradual lifting of the measures imposed, after her speech to the EU Parliament on Wednesday. Brussels seems to be favouring a coordinated lifting of the measures placed for the EU. The three main criteria, mention that there should be sound epidemiological criteria that shows a significant decrease in the spread, before lifting any measures. Also there should be enough capacity in the healthcare system and scale testing needs to be possible to monitor the activity of the virus. Interestingly enough, the head of the EU also stated that the next EU budget should the main force behind the European answer to the corona crisis. It’s characteristic that Germany, has anounced plans to slowly ease restrictions. Similar easing of restrictive measures, have also started to be implemented in Denmark, Spain, Austria and some regions of Italy. We expect more details though from the teleconference of EU leaders on Thursday, especially as the mutualisation of the responsibility of the economic response, as analysed in last week’s report, still looms. Next week EUR traders are also to have a busy week ahead. Common currency traders could be zooming in on the release of Germany’s ZEW economic sentiment for April on Tuesday, as well as Eurozone’s flash consumer confidence for April on Wednesday. The main release though is expected to be Eurozone’s, Germany’s and France’s preliminary PMIs for April, due out on Thursday. Last but not least, on Friday we get Germany’s Ifo business climate also for April. The data are fresh, as they relate to the current month and could create substantial interest for traders trying to gauge the damage done by the pandemic to Eurozone’s economy.
CAD – Inflation rates after BoC’s interest rate decision
CAD’s gradual strengthening against the US from the 6th of April was suddenly interupted on Wednesday, as BoC’s interest rate decision was to be released. BoC’s interest rate decision was to remain on hold at +0.25% as was widely expected. At the same time the bank expanded its QE program as it announced a Provincial Bond Purchase program of 50 billion, while also announced a Corporate Bond Purchase Program of 10 billion. The bank also stated that it will increase the level of government bond purchases as required. In his statement Governor Poloz stated that commodity-producing countries are being hit twice right now yet repeated that +0.25% remains the lower bound for the bank’s interest rates at the moment. Also during his press conference, the bank’s Governor stated that it’s impossible to judge when the economy will be recovering. On the other hand the recent agreement among the OPEC+ group did little to help oil prices, as they remained at rather low levels until these lines are written. The demand side for oil still remains at low levels, keeping oil prices under pressure, however the question remains on how much oil demand will rise once restrictive measures are gradually lifted, and what effect it will have on oil prices. As for financial releases, we note the release of Canada’s retail sales growth rate for February on Tuesday, yet we tend to place more focus on the release of Canada’s CPI rates for March on Wednesday.
JPY – Safe haven flows to dominate once again
With the Japanese economy expected to hit a deep recession according to analysts, JPY continues to be influenced by safe haven flows. However the situation in Japan is not rosy, on the contrary. Especially, as the Fitch Ratings agency has taken various negative rating actions on five Japanese banking groups, after the coronavirus outbreak and the postponement of the Tokyo Olympics. Also it should be noted, that the Japanese government seems to be under pressure to increase its fiscal stimulus. Also, Japanese media report that the Japanese government has plans for cash payouts of ¥100k to all citizens, some mentioning that it allready secured the funds for such a fiscal stimulus. As Japanese media outlet Yomiuri, mentioned yesterday, Japan’s PM Abe, is set to declare a state of emergency over the whole country, which is to last until the 6th of May. The state of emergency will practically be an expansion of the existing one, which covered Tokyo, Osaka and five other prefectures. As for financial releases next week of interest for JPY traders, we note mainly three. The first would be Japan’s trade data for March on Monday, the second would be the Jibun preliminary Manufacturing sectors’ PMI for April on Thursday and the third , which may prove the main release coming from Japan, would be the nationwide inflation rates for March on Friday.
JA 
