The upcoming week will look to see if risk appetite can still be supported on optimism that the coronavirus curve shows signs of flattening and after the Fed’s unveiling of $2.3 trillion in programs to help businesses and governments.  With the Fed going above and beyond with stimulus expectations, the dollar could continue to weaken on easing virus fears.

The big banks will kick off earnings season this week, and everyone is bracing for some ugly results.  Despite all the uncertainty that persists regarding the coronavirus, optimism is growing that the virus may be peaking in major global hot spots and that the Fed and Capitol Hill have delivered enough stimulus to provide a safety-net for corporate America.

On the data front, regional surveys will draw some attention, but most of the focus will remain on jobless claims.  The last three-weeks have seen the coronavirus-induced economic shutdown total 16.7 million jobless claims, which will send the unemployment rate soaring towards the 13% area.  Job losses are expected to continue to be steep and it seems at one point that may have to tilt the risk scales.


US Politics

Now that Bernie Sanders has dropped out of the race, Joe Biden is the de facto 2020 Democratic presidential nominee.  The focus will now fall on Biden’s strategy for the economy and who will be his running mate.  Biden has pledged to pick a woman as his VP at the last Democratic debate and the vetting process is underway.


The UK is in for a difficult couple of weeks but there have been some early signs this week that the number of coronavirus cases is giving cause for optimism. It’s too early to say that with any confidence and I fear that the long bank holiday weekend may be a setback. The warmer weather has drawn more towards the parks and this weekend is expected to be very nice indeed. If parts of the public ignore pleas to stay at home and social distance this weekend, it could lead to stricter measures and prolonged quarantine.

Prime Minister, Boris Johnson, was released from intensive care but it is still too early for a timetable for him to resume his prime minister duties. The message from Downing Street is that he is stable and improving.


Italy still has the most fatalities as a result of coronavirus, although that’s likely to change this weekend as it continues on a more positive trajectory. The country has seen a prolonged period of deceleration which suggests its well along the latter half of the bell curve and, barring any major setbacks, can look forward to a brighter few months. The numbers are still horrible but progress will be welcomed by those likely becoming restless in their own homes.


Spain is experiencing a little bit of a setback, with the number of coronavirus cases and fatalities having risen over the last couple of days but the broader trend is promising. As ever, this is not a straightforward process and there are likely to be setbacks along the way but what we’re seeing is encouraging across the continent. It could be a pivotal week.


Euro-area finance ministers continue to work towards a solution to deal with the coronavirus crisis that’s wreaked havoc across the bloc. As we’ve seen before, southern countries are pushing for shared responsibility – and by extension debt, or coronabonds – in order to help those most in need while the northern countries led by Germany and the Netherlands are rejecting the notion. They prefer an alternative solution, possibly involving the ESM which was created during the last crisis to bail out countries. Naturally, no one that needs the cash most wants to turn to this.

This is highly political and something that is destined to hold the bloc back for years to come. It may also add to hostility between the members, with Italy again at the forefront of those pushing for shared debt and again feeling betrayed. This can only fuel further resentment in a country that has seen a significant rise in populist leaders with a mistrust of and resentment towards Brussels. If they get this wrong, it could end very badly.


China releases the Balance of Trade on Tuesday and GDP on Friday. Markets will look for a continuation in the improvement of China data as it emerges from the COVID-19 lockdown.

Otherwise, attention will remain focused on whether the opening of Wuhan results in a secondary COVID-19 outbreak, which will have implications for its management globally. Also, markets will look for more data on the possibility that previously recovered cases can spontaneously have COVID-19, in much the same way that malaria reoccurs.

Hong Kong

Hong Kong unemployment on Monday is likely to remain officially stable at 3.70%, although the situation on the ground is likely to be at odds with official data. No other significant data.

Hong Kong remains under tighter restrictions following a recurrence in COVID-19 cases. Progress on this front will be the centre of markets attention.


No significant data. Tightened COVID-19 “circuit-breaker” restrictions continue for 2nd week, most of the economy that can is working from home. Singapore faces a moment of truth in the coming week, with COVID-19 breaking out in worker dormitories, Singapore’s unacknowledged soft underbelly. A rapid increase in cases here could see restriction extended and pressure Singapore’s health system. That would be very negative for an economy deep in recession already despite government stimulus efforts.


No significant data this week. Attention remains focused on the number of COVID-19 cases and a timetable for the easing of lockdown restrictions. India’s economy is poorly placed to cope with either the outbreak or an extended lockdown. The worst is yet to come for India in all likelihood.


Employment data on Thursday expected to reveal the full extent of the COVID-19 shutdown on Australian employment with the country facing its first official recession in 30 years. A fall of 40,0000 officially probably hides the full extent of the fall in employment, which is being softened by government fiscal measures to pay salaries to keep employees in jobs. The country remains in lockdown with State borders closed internally as well.

The AUD has risen 6.50% this week and the ASX by 4.50% this week as markets price in “peak-virus” and recovery by China. That leaves both the currency and the stock market vulnerable to more bad news.

New Zealand

No significant data with the country entering week three of the four-week national lockdown. Virus cases are expected to peak this weekend or early next week. A failure on this part could see the lockdown extended and renewed pressure on the stock market and currency.

Like AUD, NZD has rallied 4.1% in the last week on “peak-virus” and a China recovery. Disapointenmnts on either front leave the NZD vulnerable to an aggressive downward reversal.


Japan Tanken Survey expected to fall to -28 on Thursday, its worst result. Japan has entered a partial voluntary lockdown of parts of the country to control COVID-19. The Government also announced a $1 trillion stimulus package that has been met with an underwhelming response as the headline figure exaggerates the actual money involved.

Japan’s government has been found wanting in its COVID-19 response and is perceived as putting business and the Olympics first. The possibility exists for a large spike in cases now that will undermine confidence in the stock market.

The Nikkei225 has rallied 8.50% in the past week on global recovery hopes. To say this is premature is an understatement, and any bad news next week leave Japan stocks vulnerable to an aggressive sell-off.



The Fed’s new loan program sent the dollar tumbling.  The $2.3 trillion injection into businesses and struggling governments was another a positively received action that will continue to support the reeling economy.  The Fed along with Capitol Hill have delivered massive stimulus that for the time being has provided a safety net for risky assets.  Significant dollar declines, however, are not a certainty as the flight-to-safety trade could reassert itself if the coronavirus outlook takes a turn for the worse.


Oil price volatility will remain in place, but a complete crash toward single digits seems to have been averted.  A historic production cut agreement between OPEC and its allies was almost derailed by Mexico.  Mexico appears to have the US making up for their shortfall in production cuts.

The OPEC ++ production cuts should help prices tentatively stabilize in the short-term, but prices should remain heavy as the market will still be oversupplied. Energy traders will shift their focus back to the demand side and try to figure out when Europe and the US will reopen their economies.


Gold continues to rally as central banks keep finding news ways to pump stimulus into the economy.  The latest actions by the Fed have reinvigorated gold bulls.  The Fed is now buying riskier debt and that should alleviate concerns for a scramble for cash in the short-term.  If major global hot spots show further signs that the curve is flattening, traders could see a weaker dollar support higher gold prices.

Right now, a lot seems to be going right for gold, except for the gold market is not showing any signs that the spreads between New York and London will narrow back to normal.  Gold refineries are opening up and over the coming weeks, the spread should narrow between the spot and futures market.


Bitcoin continues to be the top coin in the crypto market.  Bitcoin’s last month of huge gains benefitted the from broader risky asset market rally.  Bitcoin has rebounded strongly from the March 13th low of $3,914.70 and has found massive resistance from the $7,500 level.  The longer-term outlook remains cloudy for Bitcoin as investors might prefer to hold more-established assets now that everything seems to still be at heavy discount.

Bitcoin will likely be one of the first risky assets that gets sold if we see another scramble for cash.


Key Economic Releases and Events:


Monday, April 13th

Easter Monday is a public holiday for much of EMEA, including the UK, Western Europe, the Nordics and sub-Saharan Africa. Australia and Canada will also observe the holiday.

President Macron will update the nation on possibly extending the country’s lockdown.


Tuesday, April 14th

China Mar Trade Balance Data: Exports to decline 14% and imports to fall by 9.8%

Earnings Season is here.  JP Morgan and Wells Fargo report before the open.

Texas Railroad Commission reviews output cut proposals

IMF publishes 2020 Global Financial Stability Report


Wednesday, Apr 15th

South Korea holds parliamentary elections

Next round of bank earnings come from Bank of America, Goldman Sachs and Citigroup

8:30am USD March Retail Sales Advance M/M: -7.5%e v -0.5% prior (worst ever drop since records started in 1992).

10:00am CAD Bank of Canada Interest Rate Decision

9:30pm AUD Australia March Unemployment Change: -30.0Ke v +26.7K prior


Thursday, Apr 16th

8:30am USD Jobless Claims

10:00pm CNY China Q1 GDP Q/Q: -9.8%e v +1.5% prior; Y/Y: -6.0%e v +6.0% prior

10:00pm CNY China Mar Industrial Production: -5.4%e v no prior; Retail Sales: -10.0%e v no prior


Friday, April 17th

10:00am USD Mar Leading Index: -7.0% v +0.1% prior

By Ed Moya