Stock markets around the world strengthened slightly last week as most nations went ahead with their Covid-19 lockdown exit plan. Tensions between China and the United States remained in focus. News related to the topic was confusing, and President Donald Trump remained unconditional. IN forex market, the Australian dollar made some strong gains, but it remained below the high levels hit in the previous week. The dollar witnessed a certain amount of negative interest rate sales in 2021. European majors also remained generally weak. That being said, here’s a look at some of the key announcements scheduled for the coming week:
# 1: US Fed Chairman Jerome Powell testifies (05/19/2020 Tuesday, 14:00 GMT)
Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin are scheduled to testify on Coronavirus Assistance, Emergency Aid and the Satellite Security Act for the Senate Banking, Housing and Urban Affairs Committee in Washington DC. There are two parts to the testimony. In the first part, they read a prepared statement. This is followed by a question-answer session. As the questions are not disclosed in advance, they often lead to undescribed answers and cause high market volatility.
# 2: United Kingdom BoE Governor Andrew Bailey Speaks (05/20/2020 Wednesday 13:30 GMT)
Andrew Bailey, Governor of the Bank of England, and three members of the Monetary Policy Committee are scheduled to testify before the Treasury Select Committee in London on the economic impact of COVID-19. Markets often become unstable during such events as traders try to understand the direction of interest rates in the near future.
# 3: Australia RBA Governor Philip Lowe Speaks (05/21/2020 Thursday 02:30 GMT)
Philip Lowe, Governor of the Reserve Bank of Australia, is scheduled to attend a panel discussion in Sydney at the Financial Services Institute in Australasia. The audience expected to ask questions.
# 4: United Kingdom Flash Services PMI (05/21/20220 Thursday 08:30 GMT)
In the UK, the Services PMI reported by IHS Markit / CIPS was revised up to the 13.4 level in April from the preliminary reading of 12.3. However, the reading still pointed to the strongest contraction in the service sector since the survey was started in July 1996. The contraction in the sector is attributed to the closure, given the COVID-19 pandemic. New work and backlogs and employment fell at record speed. New business from abroad declined due to business closures and international travel restrictions. These resulted in interruption of new projects signed up for customers in Europe, the US and the Middle East. Average cost burdens fell for the first time ever since 1996 for several reasons, including lower labor costs, office costs and fuel prices. Business sentiment improved slightly from the record low hit in March. However, service providers felt that business operations are unlikely to be normal in the near future.
Forecast for May 2020: 20.0
# 5: USA Flash Manufacturing PMI (05/21/2020 Thursday 13:45 GMT)
In the United States, the manufacturing PMI reported by IHS Markit was revised down to the 36.1 level in April from the preliminary treatment of 36.9. The index had reached the 48.5 level in March. April readings were the lowest ever since early 2009 due to record declines in production, exports and new orders due to the shutdown measures taken to contain the COVID-19 outbreak. Employment fell most since March 2009 amid the availability of greater available capacity. Backlogs at work declined most in as many as 11 years. Input costs fell amid reduced demand for inputs. A sharp fall in fuel prices also affected input prices. Output taxes fell the most since the series was launched in May 2007.
Forecast for May 2020: 37.5
# 6: US Fed Chairman Jerome Powell Speaks (05/21/2020 Thursday 18:30 GMT)
Federal Reserve Chairman Jerome Powell is scheduled to provide opening comments via satellite during the “Fed Listens” event on COVID-19. Markets often become unstable during his post as traders try to understand interest rates in the near future.
# 7: UK Retail Sales (05/22/2020 Friday 06:00 GMT)
In the UK, retail sales fell by 5.1 per cent on a month-over-month basis in March, the biggest drop in the record, as several stores stopped trading activities from March 23, following the implementation of the lockdown to contain the spread of coronavirus. The reading for the month came much worse than analysts’ expectations of a 4.0 percent decline. Sales in clothing stores declined, but grocery stores and retailers noted growth. Food store sales rose 10.4 percent, noting the strongest gain ever on the record. Year-on-year, retail sales fell 5.8 percent, which is the biggest decline to date. For the first quarter of this year, retail sales fell 1.6 percent compared to the previous three months due to a sharp drop in sales in non-food stores and gas stations.
April 2020 forecast: -16.0 percent
# 8: France Flash Services PMI (05/22/2020 Friday 07:15 GMT)
In France, Services PMI reported by IHS Markit was revised down to the 10.2 level in April from the preliminary treatment of 10.4. In the previous month, the index was at the 27.4 level. This month’s reading pointed to the largest contraction in the service sector with a record mid-closure for a full month to prevent the spread of coronavirus. New orders dropped to a low level all the time following a decline in export sales to the fastest rate since the series began. The rate of job loss rushed to the highest level on record. Input prices dropped at the steepest rate ever since this study was started due to very heavy discounts from suppliers. Output taxes fell by the fastest price ever since June 2009. Sentiment deteriorated to a new low level due to expectations of a global economic downturn over a longer period.
Forecast for May 2020: 28.8
# 9: Germany Flash Manufacturing PMI (05/22/2020 Friday 07:30 GMT)
In Germany, the manufacturing PMI reported by IHS Markit / BME was revised slightly up to the 34.5 level in April from the preliminary treatment of 34.4. The reading, however, still pointed to a sharp decline in manufacturing activity ever since March 2009 due to the COVID-19 pandemic and the action taken globally to contain the spread of coronavirus. This led to a sharp decline in new orders and output. Furthermore, a fall in demand and not so encouraging prospects for the next year led to deep cuts in the number of jobs. Employment fell to the lowest level in as many as 11 years despite the widespread hiring of the short schedule. Producers’ expectations of production for the coming year came close to the record lows recorded in March. Most companies (62%) expressed pessimism, citing concerns about long-term effects on demand and supply due to the virus outbreak.
May 2020 Forecast: 39.0
# 10: Germany Flash Services PMI (05/22 / 2020 Friday 07:30 GMT)
In Germany, the Services PMI reported by IHS Markit was revised slightly up to the 16.2 level in April from its original estimate of 15.9. The index was at the 31.7 level in March. However, this month’s reading pointed to the largest correlation in the service sector ever, due to the shutdown measures implemented due to the coronavirus outbreak. The decline in activity was driven by business closures, short-term work and a large drop in new work orders. Hotels and restaurants and other services, including education, cultural services and recreation, were the most affected areas. New orders and hiring of workers fell at a record rate and prices fell amid intensified competition for new work. Lower fees were recorded for the first time in a decade. In general, service providers remained pessimistic about the outlook for activity in the next year due to growing concerns related to the unpredictable nature of the Covid-19 pandemic.
Forecast for May 2020: 26.2