Trading Week Ahead: 11th-15th May 2020
Key Events and Data Releases This Week
NZD ANZ Business Confidence
USD Core CPI, CPI
NZD Official Cash Rate, RBNZ Monetary Policy Statement, RBNZ Rate Statement, RBNZ Press Conference
GBP Preliminary GDP
USD Fed Chair Powell Speaks
AUD Employment Change, Unemployment Rate
NZD Annual Budget Release
GBP BOE Gov Bailey Speaks
USD Unemployment Claims
CAD BOC Gov Poloz Speaks
EUR German Preliminary GDP
USD Core Retail Sales Retail Sales
(Times adapted to AEST timezone)
It was a surprisingly good trading window for risk last week, despite some shocking news on the employment front at its end. You’re right in thinking that a jump from just over 4% to nearly 15% in U.S. unemployment would be devastating for markets. Add a loss of 20,500K in payrolls and yes, markets might start to get spooked. However, this is another fine example of expectation at work. Since last Friday’s data came in better than expected, risk markets ended the trading week on a strong note, building on last week’s positive performances.
But it was close to 15%? Horrible I know, but Under the current climate, a reading of 14.7% looks like a small win compared to the 16% expected figure. Furthermore, some might say it could start to point to an overreaction and possibly a bottom that might not be as bad as we first thought.
Those Risk Numbers in Detail
Let’s look at a few of those main risk markets. The AUD capped off the week with a 1.90% gain and a solid move back above 65 U.S. cents. Oil made it with two weeks of consecutive gains, adding over 21%, while U.S. indexes continued higher with nothing for now stopping the current recovery rallies. The Nasdaq led the pack adding almost 6% for the week, while the S&P500 took second place registering an increase of 3.50%. Bitcoin was another that saw solid demand adding 11.53% for the week. The cryptocurrency at one point broke above 10,000 for the first time since February. The prospect of Bitcoin halving remains a key driver, while interestingly, legendary trader and fund manager Paul Tudor-Jones described BTC as the new inflation hedge in times of uncertainty.
What to Look Out For This Week
The focus remains firmly on risk market recoveries this week with the NDX100 back above 9,200 and only 5.41% away from record highs! US CPI and retail sales data could certainly play a part, with retail sales expected to be lower. Could we see a repeat of data coming in better than expected? U.S. CPI is also expected to tank to -0.7%. Fed Chair Powell speaks on Wednesday, with the Republicans currently stalling a further round of coronavirus stimulus.
Following a German ruling against ECB purchases, the EUR failed to move last week and this could continue to hold it up. Expectations for German preliminary are for a drop of over 2% and any increase on that could lead to further EUR uncertainty. The UK preliminary is another that is due and it’s expected to fall by over 2%. The GBP, like the EUR, remained in the red at the end of last week and continues to look for some direction.
There are a few tests this week for AUD to navigate with both employment change and unemployment due. Unemployment is expected to increase to 8.3%. However, if the current USD trend continues and data comes in better than expected, we could see further boosts to the AUD. Finally, if you are a Kiwi trader, RBNZ will hold their rates meeting, and annual budget release on Monday. Recovery measures and debt levels could be a focus.