Trading Week Ahead: 8th June – 12th June 2020
Key Events and Data Releases This Week
EUR ECB President Lagarde Speaks
USD CPI, CORE CPI
USD FOMC Economic Projections, FOMC Statement, Federal Funds Rate, FOMC Press Conference
USD Initial Jobless Claims
CAD Employment Change, Unemployment Rate
USD Average Hourly Earnings, Non-Farm Employment Change, Unemployment Rate
GBP Industial Production, GDP
USD Preliminary UoM Consumer Sentiment
(Times adapted to AEST timezone)
Risk ruled last week with incredible gains from the AUD, EUR and GBP to the USD and JPY. There has been continued positivity on the recovery front and weaker demand for safe havens which helped drive the AUD during the week. On the other hand, the EUR surged after the ECB meeting on Thursday. The market was looking for clarity on the Pandemic Emergency Purchase Program (PEPP) front, and it came in with unanimous GC support. The debate around the size continued, 600 billion Euros a figure was thought to be able to bring inflation to pre-COVID-19 levels. This had a massive impact on the EUR as it surged to the USD and JPY during last Thursday’s session. The market had been expecting 500 billion, the 600 billion brings the total to 1.35 trillion and the scheme has been extended to mid-2021.
Stocks continued to drive during the week with further gains across most indexes. We saw multiple indexes hitting plus 5% in gains during the week, as optimism over recovery and stimulus maintained the drive. U.S. data surprised us with the ISM Manufacturing, non-manufacturing PMI and ADP Non-Farm Employment Change coming in higher than expected. Australian GDP and building approvals also caused surprised, coming in higher than expected.
Friday’s U.S. jobs data came in better than expected. Unemployment 13.3% and jobs added 2,509k, a massive difference from the 8,000k thought to be lost. The Dow and S&500 saw substantial gains after the release. Recovery sounds are getting ever louder!
This week, attention will mainly be focused on the FED as it meets on Thursday morning AEST. The expectation is for rates to remain on hold, but attention will be on the statement – will we see new stimulus package talk? Analysts continue to speculate around the FED decision, will use negative rates to help aid in the recovery from COVID-19?
OPEC’s scheduled meetings this week still seem to be going ahead, there was some talk last weel that they could be held earlier due to attention being on output cuts. Reuters reported on Wednesday that OPEC heavyweight Saudi Arabia and non-OPEC leader Russia were thought to support a one-month extension of the current level of supply cuts. Focus remains on the recovery and how that will influence future energy demand.
Finally, a few weekly charts showing some of the fantastic rallies we saw last week from risk currencies.