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Riskier Assets Find Early Support. Chatter from Beijing and Washington Could Rock the Boat

Bob Mason

Earlier in the Day:

It was a quiet start to the week on the economic calendar this morning. The Kiwi Dollar was in focus in the early part of the day.

Outside of the numbers, the COVID-19 updates and geopolitics also provided direction early on. Some uncertainty over what lies ahead for China and the U.S may become a factor later in the day…

Looking at the latest coronavirus numbers,

On Sunday, the number of new coronavirus cases rose by 78,198 to 4,179,839. On Saturday, the number of new cases had risen by 100,666. The daily increase was far lower than Saturday’s rise and lower than an 80,636 increase on the previous Sunday.

France, Germany, Italy, and Spain reported just 3,549 new cases on Sunday, which was down from 5,163 new cases on Saturday. On the previous Sunday, 3,938 new cases had been reported.

From the U.S, the total number of cases rose by 20,329 to 1,367,638 on Sunday. On Saturday, the total number of cases had risen by 28,805. On Sunday, 3rd May, the total new number of cases had risen by 27,348.

For the Kiwi Dollar

Electronic card retail sales tumbled by 46.8% in April, following a 4.6% decline in March.

According to NZ Stats,

  • All industries showed unprecedented falls in April.
  • Furniture, hardware, and appliances (durables) led the decline, with a 72% (NZ$1bn) slump.
  • Hospitality sales, including accommodation, cafes, and restaurants tumbled by 93% (NZ$721m)
  • New Zealand was under a level 4 lockdown for most of the month, leading to the dire figures.
  • The lockdown led to lower traffic volumes and restrictions on non-essential travel, which resulted in a 60% (NZ$291m) fall in fuel sales. Sliding pump prices contributed to the decline in April.
  • Grocery sales had the smallest percentage fall in April, down 11% (NZ$275m).

The Kiwi Dollar moved from $0.61283 to $0.61323 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.18% to $0.6147.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.25% to ¥106.92 against the U.S Dollar, while the Aussie Dollar was up by 0.24% to $0.6548.

The Day Ahead:

For the EUR

It’s a particularly quiet day ahead on the economic calendar. There are no material stats due out of the Eurozone to provide the EUR with direction.

The lack of stats will leave the focus on the latest COVID-19 numbers and any chatter from Brussels on fiscal policy.

Other drivers include any response to the German court ruling on the ECB’s bond-buying program and chatter from Beijing and Washington.

At the time of writing, the EUR was up by 0.06% to $1.0845.

For the Pound

It’s also a particularly quiet day ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

There’s plenty of uncertainty over what lies ahead for the UK and the UK economy. A continued rise in the number of new coronavirus cases and Brexit uncertainty remain negatives for the Pound.

From the weekend, the government plans to ease lockdown measures supported the Pound early. Key, however, will be for new coronavirus cases to avoid a pickup in the coming weeks. In spite of an easing in measures, the UK remains behind the curve compared with EU member states and the U.S.

At the time of writing, the Pound was up by 0.16% to $1.2430.

Across the Pond

It’s a quiet day ahead on the U.S economic calendar.

There are no material stats to consider. That leaves the Greenback in the hands of the latest COVID-19 news and chatter from Beijing and Washington.

“Risk-on” sentiment in the early part of the day pinned the Dollar back.

The Dollar Spot Index was down by 0.01% to 99.727 at the time of writing.

For the Loonie

It’s a quiet day on the economic calendar, with no material stats to provide the Loonie with direction.

Market risk sentiment will be the key driver on the day. As lockdown measures continue to ease, the general consensus is that the worst is over, supporting the Loonie and other commodity currencies.

At the time of writing, the Loonie was up by 0.15% to C$1.3906 against the U.S Dollar.

This article was originally posted on FX Empire

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