BOE and RBA to stand pat. NFP to reveal staggering losses in the jobs market

BOE and RBA to stand pat. NFP to reveal staggering losses in the jobs market

After having improved earlier in the past week on promising coronavirus drug and hope of shutdowns ending soon, risk sentiments saw a turnaround on Thursday on fears that the US-China trade could resume. The US president Donald Trump who was accusing China for not giving enough warning about the coronavirus, has hinted at new tariffs as a way to retaliate against the Asian nation’s handling of the COVID-19 outbreak. Terrible data released on Thursday further dented sentiments. Data showed a record collapse in consumer spending in March as the economy reels from nationwide lockdowns to slow the spread of COVID-19. The reports came on the heels of news on Wednesday that the economy suffered its sharpest contraction since the Great Recession in the first quarter, ending the longest expansion in the United States’ history.  Initial claims for state unemployment benefits totaled a seasonally adjusted 3.839 million for the week ended April 25, the US Labor Department said. While that was down from 4.442 million in the prior week and marked the fourth straight weekly drop in applications, the numbers are still at levels unimaginable just months ago.

Another measure of the fallout will come this Friday, when the U.S. government releases the country’s employment report for April. The U.S. economy is expected to have shed 20 million jobs for the month. But before that, the ADP employment report due for release on Wednesday will give traders a flavor of what to expect from the official payrolls report on Friday. And the ISM non-manufacturing survey for April on Tuesday, can also be crucial for market sentiment.

On another side, the BOE will hold a policy meeting on Thursday, but policymakers are expected to hold off on fresh action, after having cut interest rates twice in March to a new low of 0.1% and ramped up government bond-buying by a record 200 billion pounds. So the pound’s reaction, may depend on the comments of the new Governor, at it’s press conference after the meeting who is expected to maintain a dovish tone and hint that the central bank is prepared to do much more if need be.

The RBA on another side is also expected to take no action during his meeting on Tuesday, and policymakers are expected to keep the door open for further stimulus actions if needed. And such dovish comments may put some pressure on the Australian currency.

In brief, this weeks’ economic highlights:

Monday, May 4, 2020:

• China Caixin Manufacturing PMI (Apr) (01:45 GMT)
• German Manufacturing PMI (Apr) (07:55 GMT)

Tuesday, May 5, 2020:

• RBA Interest Rate Decision (May) (04:30 GMT)
• RBA Rate Statement (04:30 GMT)
• UK Composite PMI (Apr) (08:30 GMT)
• UK Construction PMI (Apr) (08:30 GMT)
• UK Services PMI (Apr) (08:30 GMT)
• US ISM Non-Manufacturing PMI (Apr) (14:00 GTM)

Wednesday, May 6, 2020:

• Australia Retail Sales (MoM) (Mar) (01:30 GMT)
• US ADP Nonfarm Employment Change (Apr) (12:15 GMT)
• Crude Oil Inventories (14:30 GMT)

Thursday, May 7, 2020:

• BoE Interest Rate Decision (May) (06:00 GMT)
• BoE Inflation Report (11:00 GMT)
• BoE MPC Meeting Minutes (11:00 GMT)
• US Initial Jobless Claims (12:30 GMT)

Friday, May 8, 2020:

• US Nonfarm Payrolls (Apr) (12:30 GMT)
• US Unemployment Rate (Apr) (12:30 GMT)
• Canada Employment Change (Apr) (12:30 GMT)