In the upcoming week, traders will look for signs as to whether the Coronavirus curve is flattening. They are also likely to keep an eye on Fed’s $2.3 trillion monetary easing program to help governments and businesses. As the Fed has gone above and beyond with its stimulus plans, the dollar is likely to weaken as the virus fears ease.
Further, the big banks are slated to kick off the earnings season. The results are likely to be very bad. In spite of all the uncertainty related to the spreading of Coronavirus, people are optimistic that the virus might have peaked in the major hot spots around the globe and that the stimulus delivered by the Fed is sufficient to provide a safety net for the businesses.
On the economic data front, the focus will be on jobless claims from the US. The nearly 17 million jobless claims filed over the last three weeks are likely to drive the unemployment rate to the 13 percent level. Steep job losses are likely to continue but at one point the risk scales will be tilted. Having said that here is an outlook on a few key data to be released next week:
#1: China Trade Balance 04/14/2020 Tuesday 03:00 GMT)
China reported a trade deficit of yuan 42.59 billion for the first two months (January and February) of this year based on customs data. During the period January-February, yuan-denominated exports fell by 15.9 percent from that for the same period last year, while imports declined 2.4 percent as the coronavirus outbreak disrupted manufacturing activity. China did not report the trade figures for January alone. Customs had said earlier that the combined balance of trade figures for January and February would be released in line with the reporting of some of the other major economic data of the country.
Forecast for March 2020: It is expected that China would report a trade surplus of yuan 178 billion
#2: United States Retail Sales (04/15/2020 Wednesday 12:30 GMT)
In the United States, retail sales dropped 0.5 percent on a month-on-month basis in February after the reading for the prior month was revised upward to an increase of 0.6 percent in January. The reading for February missed analysts’ expectations for a 0.2 percent increase in retail trade. This is the largest drop in retail sales ever since December 2018. Consumers reduced their spending on a wide range of products such as motor vehicles and parts, furniture, electronics and appliances, building materials, health and personal care products, and clothing. Sales declined at gasoline stations, restaurants and bars, and general merchandise stores.
Forecast for 2020: -8.0 percent
#3: United States Core Retail Sales (04/15/2020 Wednesday 12:30 GMT)
In the United States, core retail sales, which exclude autos, declined 0.4 percent on a month-over-month basis in February, following the revised 0.6 percent increase in January. Analysts had expected core retail sales to increase by 0.2 percent in February.
Forecast for March 2020: Core retrial trade is expected to fall by 5.0 percent
#4: Canada BoC Monetary Policy Report (04/15/2020 Wednesday 14:00 GMT)
The Bank of Canada releases the Monetary Policy Report on a quarterly basis. The report provides valuable insights into the central bank’s view on the key factors inflation and economic conditions that shape the direction of the monetary policy and impact their interest rate decisions.
#5: Canada BoC Rate Statement (04/15/2020 Wednesday 14:00 GMT)
The Bank of Canada releases the Rate Statement 8 times in a year. The central bank uses it as a tool to communicate with investors as regards the monetary policy. The Rate Statement provides details about the outcome of the members’ decision on where to set interest rates. In addition, it offers commentary on the economic conditions that impacted their decision. More importantly, the report discusses the nation’s economic outlook and provides clues on future decisions.
#6: Canada Overnight Rate (04/15/2020 Wednesday 14:00 GMT)
In the emergency meeting held on March 27, the Bank of Canada decided to slash its Overnight Rate by 50 basis points to the 0.25 percent level. Earlier on March 13, the central bank had cut the benchmark interest rate by 50 basis points to the 0.75 percent level from its 1.25 percent level. The borrowing costs have been cut to support the financial system and the economy amid the Coronavirus pandemic. The Monetary Policy Committee also instituted a Commercial Paper Purchase Program for restoring the key short-term funding source for businesses. Policymakers said that the acquisition of government securities in the secondary market will be continued until the economy recovers. In addition, they noted that the economic and financial conditions are being closely monitored in coordination with the central banks and fiscal authorities of other G7 nations and that further action will be taken if necessary.
Forecast for April 2020: 0.25 percent
#7: Canada BoC Press Conference (04/15/2020 Wednesday 15:15 GMT)
The Governor of the Bank of Canada holds a press conference every quarter 75 minutes after the announcement of the interest rate to discuss the details. There are two parts to the press conference. In the first part, the Governor would read out a prepared statement. In the second part, he answers questions posed by the press. As the questions can lead to answers that are not scripted, heavy market volatility can be expected.
#8: Australia Employment Change (04/16/2020 Thursday 01:30 GMT)
In February, Australia added 26,700 jobs after the figure for the prior month was revised downward to a gain of 12,900 jobs. The reading for February beat analysts’ expectations for an addition of 10,000 jobs. Full-time employment rose by 13,300 and part-time employment increased by 7,800.
Forecast for March 2020: Australia expected to lose 30,000 jobs
#9: Australia Unemployment Rate (04/16/2020 Thursday 01:30 GMT)
In Australia, the unemployment rate dropped to the 5.1 percent level in February from the 5.3 percent level in the prior month. The reading for the month came below analysts’ expectations of 5.3 percent. The number of jobless people in the country dropped 26,400 and employment increased by 26,700. While people looking for full-time employment declined to 468,300, those looking for part-time jobs increased to 220,400. The participation rate declined to the 66.0 percent level from the 66.1 percent level. Analysts had expected the participation rate to come in at 66.1 percent. The underemployment rate came in steady at the 8.6 percent level, but the underutilization rate declined by 0.2 points to the 13.7 percent level.
Forecast for 2020: 5.4 percent
#10: United States Unemployment Claims (04/16/2020 Thursday 12:30 GMT)
In the United States, the number of people filing for jobless benefits dropped to 6.606 million during the week that ended on April 4 from the record high figure of 6.867 million reported for the previous week. The reading for the week came in above analysts’ expectations of 5.25 million. With the latest increase, the total reported over the last three weeks is close to 17 million amid the deepening of the coronavirus crisis. The four-week moving average, which eliminates week-to-week volatility, rose to an all-time high figure of 4.266 million. Meanwhile, continuing jobless claims touched the 7.455 million mark by the week that ended on March 28, the highest on record. The figure for the last week is likely to be false as many states continue to struggle to process the unprecedented number of claims they are receiving. The $2.2 trillion monetary easing package approved by the government has raised the payments to the jobless by up to $600/week for as many as four months. This could also have contributed to an increase in claims.
Forecast for 2020: 5.0 million
#11: China GDP (04/16/2020 Friday 02:00 GMT)
In China, the GDP grew by 6.0 percent on a year-on-year basis in the fourth quarter of last year, the same as in the prior quarter. The figure for the December quarter of last year matched with analysts’ expectations. This is the weakest growth ever since the January quarter of 1992 affected by the US trade pressure and slower domestic and overseas demand. For the full year 2019, the economy advanced 6.1 percent, the slowest rate in 29 years. The growth figure for the years, however, came in within the target of 6.0 to 6.5 percent of the government. It is expected that the economy would remain under pressure in 2020. Though the deal (Phase One) with the US eased tensions to some extent and improved business optimism, further monetary easing would be required to lift domestic demand.
Forecast for March 2020: China’s GDP is expected to contract by 6.0 percent