Cautious Optimism Returns to Investors (Weekly Review)

The foreign exchange market quite calmly reacted to the release of extremely negative data on the US labor market. Along with the coronavirus quarantine measures, this sharp increase in unemployment rate and a large-scale reduction in the number of employees was an expected event, hence the sluggish reaction. In addition, market participants are quite optimistic about the future of the world's leading economies due to the weakening of quarantine measures.

The so-called restart of economies has stopped the fall of stock indices, and also helps maintain demand for the AUD, although its position remains vulnerable due to renewed friction between the US and China. This time, Donald Trump accuses the Chinese side of the damage caused by the spread of the coronavirus, and promised to demand a reckoning for the damage caused to the US economy.

In turn, the development of a vaccine, according to experts, against the virus may be delayed, so the risks of a new outbreak of a pandemic remain, and optimists should still be extremely careful. The GBP, regardless of these factors, may remain under pressure in the short term, as the UK and the EU still cannot agree on trade negotiations, and the EUR may suffer from this, despite the recovery from the GBP, as without mutually beneficial trade relations, the Eurozone economy could also suffer.

Schedule for this week:

Monday, May 18
14:00 GMT - USA. NAHB Housing Market Index.

Tuesday, May 19
01:30 GMT - Australia. Reserve Bank of Australia Meeting Minutes;
04:30 GMT - Japan. Industrial Production;
06:00 GMT – United Kingdom. ILO Unemployment Rate (3M) (Mar);
06:00 GMT - United Kingdom. Average Hourly Earnings;
06:00 GMT - United Kingdom. Claimant Count Change;
09:00 GMT - Germany. ZEW Economic Sentiment;
12:30 GMT - USA. Housing Starts;
14:00 GMT - USA. Fed Chair Powell Testifies.

Wednesday, May 20
01:30 GMT - PRC. People's Bank of China Loan Prime Rate;
06:00 GMT - United Kingdom. Consumer Price Index (CPI);
09:00 GMT - Eurozone. Consumer Price Index (CPI);
09:00 GMT - Eurozone. Core Consumer Price Index (CPI);
12:30 GMT - Canada. Consumer Price Index (CPI);
18:00 GMT - USA. Federal Open Market Committee (FOMC) Meeting Minutes.

Thursday, May 21 
23:00 GMT - Australia. Commonwealth Bank Manufacturing Purchasing Managers Index (PMI);
02:30 GMT - Australia. Reserve Bank of Australia Governor Lowe Speaks;
07:30 GMT - Germany. Markit Composite Purchasing Managers Index (PMI);
08:00 GMT - Eurozone. Markit Composite Manufacturing Purchasing Managers Index (PMI);
08:30 GMT - Australia. Budget Balance;
18:30 GMT - USA. Fed Chair Powell Speaks.

Friday, May 22
22:45 GMT – New Zealand. Retail Sales;
06:00 GMT - United Kingdom. Retail Sales;
12:30 GMT - Canada. Retail Sales.

Author: Anthony Porter, IAFT Analyst