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BCC: Only 37% UK firms can fully restart with workplace safety guidance

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    ActionForex
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    According to the coronavirus business impact tracker of the British Chambers of Commerce, only 37% of firms said they can “fully restart” operations while implementing the government’s coronavirus workplace safety guidance. 45% said they can “partially restart”.

    BCC Director General Adam Marshall said: “Companies at all levels of readiness to restart, of all sizes, and in every part of the UK will need sustained government support as they navigate the ‘new normal’ with reduced demand and restrictions still in place. Many support schemes will need to be adapted and updated, but must not be withdrawn prematurely.”

    Full release here.

    US CBO: Labor market to materially improve after Q3

      By
      ActionForex
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      US Congressional Budget Office said in a report yesterday the economy is expected to “begin recovery during the second half of 2020”. Labor market is projected to “materially improve after the third quarter”. Though, “the persistence of social distancing will keep economic activity and labor market conditions suppressed for some time.”

      In the new projections, GDP would contract by an annualized rate of -37.7% in Q2. Though, the economy is expected to pick up during H2 and rebound by averaged annualized rate of 15.8%. For 2020 as a whole, GDP could contract by -5.6% in 2020, followed by 4.2% growth in 2021.

      Unemployment rate is projected to peak at an average of 15.8% in Q3. At the mean time, participation rate, has already dropped by -3.2% to 60.2% in April. It’s expected to recovery slightly to 61.1% in Q3 only, and edge further higher to 61.5% in 2021.

      Full report here.

      Fed Rosengren: Unemployment will remain at double-digit by year end

        By
        ActionForex
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        Boston Fed President Eric Rosengren said yesterday that unemployment will likely “peak at close to 20%” in the US. “Unfortunately, even by the end of the year, I expect the unemployment rate to remain at double-digit levels.” He emphasized that “public health solutions are paramount”. Without them, it will be “virtually impossible to return to full employment”.

        He added that the Main Street Lending Program, which is expected to open in the coming weeks, is an “important program”. “It will not be able to assist everyone, but we expect that it will provide an important bridge for many businesses that employ much of the American workforce,” he added.

        Rosengren’s full speech.

        ECB Lane: Q2 is trough of coronavirus crisis in all scenarios

          By
          ActionForex
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          ECB Chief Economist Philip Lane said in a speech that in all scenarios developed, Q2 represents the “trough” of the coronavirus crisis. A “significant rebound is expected over the summer” in line with removal of the most severe lockdown measures.

          But the scenarios differ in terms of the “duration and severity” of virus-related restrictions on economic activity and the behaviors of households and firms in the rest of 2020 and throughout 2021. In the most severed case, real GDP would fall by -12% in 2020.

          Full release here.

          German Maas very confident on EU support for Franco-German recovery plan

            By
            ActionForex
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            German Foreign Minister Heiko Maas said he’s “very confident” that the Franco-German Recovery Fund plan will get broad support from EU members. He added, “it is a first step to a European solution, we will have to discuss the details within Europe but we have agreed that we must find a solution quickly.”

            Euro is apparently lifted by the development, in particular against Swiss Franc. Germany and France agreed to jointly propose the European Commission to borrow EUR 500B on behalf of the whole EU. It’s seen as a material step forward towards a joint fiscal capacity to support recovery out of the coronavirus pandemic. The Commission is expected to outline the proposal before the European summit on May 27.

            German ZEW rose to 46.0, optimism is growing, but catching-up will take a long time

              By
              ActionForex
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              German ZEW Economic Sentiment rose to 46.0 in May, up from 25.2, beat expectation of 27.4. That’s the second increase in a row. However, Current Situation Index dropped slightly by -2.0 to -93.5, below expectation of -87.8. Eurozone ZEW Economic Sentiment rose to 51.0, up from 28.2, beat expectation of 30.0. Current Situation Index also dropped slightly by -1.1 to -95.0.

              “Optimism is growing that there will be an economic turnaround from summer onwards. This is also reflected in the significant improvement in expectations for the individual sectors. According to the financial market experts surveyed, economic growth is expected to pick up pace again in the fourth quarter of 2020. However, the catching-up process will take a long time. Only in 2022 will economic output return to the level of 2019,” comments ZEW President Achim Wambach.

              Full release here.

              60% trade will come into UK tariff free with new UKGT regime

                By
                ActionForex
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                UK announced a new post-Brexit MFN tariff regime today, called the UK Global Tariff (UKGT). This will replace the EU’s Common External Tariff starting on January 1, 2021, at the end of the Brexit Transition Period.

                Under the new regime, tariffs on a wide range of products will be eliminated. 60% of trade will come into UK tariff free on WTO terms, of through existing preferential access. Successful FTS negotiations will increase the total. Tariffs will be maintained on agricultural products such as lamb, beef and poultry. Car tariffs will be maintained at 10%.

                “Our new Global Tariff will benefit UK consumers and households by cutting red tape and reducing the cost of thousands of everyday products,” International Trade Secretary Liz Truss said.

                Full release here.

                UK claimant counts jumped 8655k to 2.1m in April

                  By
                  ActionForex
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                  In April, UK claimant count, a measure of number of people claiming unemployment benefits, jumped 865.5k to 2.097m. The range of forecasts for this data was wide, from 60k change to as many as 1.5m. The released data was slightly on the high side. Claimant count rate rose to 5.8%, highest in over two decades.

                  In the three month to March, unemployment rate unexpectedly dropped to 3.9%, down from 4.0%, better than expectation of 4.4%. Average earnings including bonus slowed to 2.4% 3moy, below expectation of 2.7% 3moy. Average earnings excluding bonus slowed to 2.7% 3moy, matched expectations.

                  Full release here.

                  RBNZ Bascand: We can re-evaluate if more stimulus is needed in three months time

                    By
                    ActionForex
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                    RBNZ Deputy Governor Geoff Bascand said the central bank will know more about how the coronavirus shock is playing out in three months. And, “we can re-evaluate if we need to do more or take the foot off the pedal a little bit in three months’ time.”

                    He noted that negative interest rates were one of many monetary policy options available. “For now, we think the best thing we should be doing is large scale asset purchases and we’ve expanded that. We could expand it further if needed,” he added.

                    Separately, Assistant Governor Christian Hawkesby said the central bank is open to using all tools including buying foreign bonds. He added RBNZ’s economic projections assumed that New Zealand Dollar will depreciate.

                    Coronavirus job losses in Australia slowed

                      By
                      ActionForex
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                      Australia’s Bureau of Statistics said today that coronavirus job losses has slowed down between mid-April and early May. Overall between March 14 and May 2, payroll jobs dropped by -7.3% and total wages paid dropped -5.4%. In the week between April 25 and May 2, jobs decreased by -1.1% only while wages even rose 0.9%.

                      Head of Labour Statistics at the ABS, Bjorn Jarvis, said: “The latest data shows a further slowing in the fall in COVID-19 job losses between mid-April and early May.” In addition to the fall in total jobs slowing, some industries were now showing a reduced impact in the most recent weeks.

                      Full release here.

                      RBA minutes: Best course of action was to maintain currency policy setting

                        By
                        ActionForex
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                        In the minutes of May 5 meeting, RBA said the labor market s was expected to have “ongoing spare capacity”. Inflation was expected to stay below 2% “over the following few years. The continue to keep funding costs low and credits available to households and businesses. The “best course of action” was to maintain the currency policy setting, and monitor economic and financial outcomes.

                        RBA added that while outlook remained uncertain, if coronavirus infection rates continued to decline and restrictions were eased, “recovery could be expected to start later in 2020”. At the same time, the “substantial, coordinated and unprecedented fiscal and monetary response” was “softening” the “very significant economic contraction”.

                        Full minutes here.

                        Powell: Fed committed to use full range of tools as part of broader public-sector response to coronavirus

                          By
                          ActionForex
                          -

                          Fed Chair Jerome Powell will testify to the Congress on coronavirus and CARES act today. In pre-released opening remarks, He reiterated that Fed is “committed to using our full range of tools to support the economy”. Fed’s actions are “only a part of a broader public-sector response”.

                          After lowering interest rate to near zero in March, the board expects to ” maintain interest rates at this level until we are confident that the economy has weathered recent events and is on track to achieve our maximum-employment and price-stability goals.”

                          Full remarks here.

                          EUR/CHF in strong rebound, eyeing 1.0611 to complete double bottom

                            By
                            ActionForex
                            -

                            EUR/CHF rebounds strongly in first part of US session, following strong risk-on markets. At this point, we’re not totally certain on the drive behind the sharp move, other than reverse safe-haven flows. And immediate focus in on 1.0611 resistance. Break will complete a double bottom pattern (1.0503, 1.5040).

                            Considering the strength of current rise, it seems 1.0710 cluster resistance (38.2% retracement of 1.1059 to 1.0503 at 1.0715) is the real trend defining hurdle, rather than 1.0653 resistance.

                            Gold hammered by risk on sentiments, deeper correction underway?

                              By
                              ActionForex
                              -

                              Dollar and Yen are under much selling pressure today as markets are embracing coronavirus vaccine optimism. Even Gold is hammered down. The breach of 1729.99 minor support suggests temporary topping at 1765.29. More importantly, firstly, bearish divergence condition is seen in 4 hour MACD. Secondly, the thrust out of a triangle consolidation pattern might be terminal. Focus is immediately back on 4 hour 55 EMA (now at 1718.75). Sustained break there would likely bring deeper pull back to 38.2% retracement of 1451.16 to 1765.25 at 1645.26 before bottoming.

                              DOW surges over 3.5% on coronavirus vaccine optimism, invalidates H&S top

                                By
                                ActionForex
                                -

                                DOW gaps up on coronavirus vaccine optimism and is currently trading up more than 3.5%, or 800 pts. The development invalidates our bearish view, with head and shoulder neck line and 55 H EMA taken out decisively. Rebound from 18213.65 is likely still in progress. Further rise should be seen back to 24764.77 for the near term. Next focus is 61.8% retracement of 29568.57 to 18213.65 at 25230.99.

                                Moderna reports positive coronavirus vaccine trial results

                                  By
                                  ActionForex
                                  -

                                  Global investor sentiments are lifted as Moderna reported “positive” data on early-stage coronavirus vaccine trial. 45 study participants received two does of testing vaccine via intramuscular injection in the upper arm approximately 28 days apart. The does contains 25 microgram, 100 mcg or 250 mcg of vaccine, 15 in a group. At day 43, antibodies were produced in all 45 participants. Levels of binding antibodies in the 20mcg group were at levels seen in people who recovered from the coronavirus. Antibodies in the 100 mcg group had “significantly exceeded levels” in recovered patients. The vaccine also produced neutralizing antibodies against Covid-19 in at least 8 participants.

                                  At the time of writing, FTSE is up 2.99%. DAX is up 3.81%. CAC is up 3.47%. DOW future is up more than 670 pts.

                                  Bundesbank: Germany still far from normal despite easing coronavirus measures

                                    By
                                    ActionForex
                                    -

                                    Germany’s Bundesbank that the extent and speed of post coronavirus pandemic is uncertainty. “Despite the easing measures that have been introduced, social and economic life in Germany is still far from what was previously considered normal.” Economic indications like ifo business climate and Gfk consumer confidence painted a “correspondingly bleak picture”.

                                    Also, there is a very high level of uncertainty about further economic development, dependent on the further course of the global infection process and the containment measures taken. . It also depends on how consumer and investment behavior changes against this background.

                                    Full release here.

                                    ECB Lane: Economy unlikely to return to pre-crisis level before 2021

                                      By
                                      ActionForex
                                      -

                                      ECB chief economic Philip Lane said in an interview by El Pais that “the speed at which the economy bounces back will then hinge on whether consumers are more reluctant to consume and businesses hold back on investment.” “From today’s perspective, it looks in any case unlikely that economic activity will return to its pre-crisis level before 2021, if not later.”.

                                      Regarding the upcoming June ECB meeting, Lane said policymakers are “in the process of analyzing the situation”. “If we see that financial conditions are too tight, or the pressure on individual bond markets is not reflecting economic fundamentals, we can adjust the size or duration of our purchases, which we can anyway allocate flexibly over time and market segments, he added.

                                      Full interview here.

                                      Japan GDP contracted -0.9% in Q1, Nishimura expects significant slump

                                        By
                                        ActionForex
                                        -

                                        Japan GDP contracted -0.9% qoq in Q1, better than expectation of -1.2% qoq. Following the -1.8% qoq contraction in Q4, the country was already in a technical recession for the first time in more than 4 years. In annualized rate, GDP contracted -3.4% in Q1, better than expectation of -4.6%.

                                        Economy Yasutoshi Nishimura warned “both domestic and external demand show Japan’s economy is in a severe state.” The economy is expected to slump significantly.

                                        UK Gove: There’s a big philosophical difference with EU on negotiations

                                          By
                                          ActionForex
                                          -

                                          UK and EU continued to complain each other after last week’s Brexit negotiation stalemate”. UK Cabinet Officer Minister Michael Gove said there is a “big philosophical difference” between the two sides. And EU wants UK to “follow their rules even after we have left the club”. Though he remained “confident” that a “there is a deal to be done” It “just requires a degree of flexibility on the EU side which I’m sure that they will appreciate they need to show.”

                                          On the other hand, Irish Foreign Minister Simon Coveney criticized on Sunday that UK was “essentially rewriting” the commitments in the political declaration of the Brexit deal. “Until the UK changes its approach in the context of giving the EU assurance that they are not going to effectively deregulate their economy while expecting free access in the EU single market, I think we’re going to continue to be in real difficulty in these talks,” he added.

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