Released yesterday, the NY Empire State Manufacturing Index tanked to -21.50 in March versus +4 expected by analysts and +12.90 printed a month
earlier. Producer prices in Switzerland deflated by 2.1% in February versus -1.0% released a month before. Japanese Tankan index tumbled
to -20 in March from -5. Non-oil exports in Singapore decline 4.80% in February, more than -4.50% penciled in by analysts and significantly
down from +4.50% printed in January.
Due today, the German ZEW economic sentiment is expected to confirm a colossal slump to -26.4 in
March from 8.7 printed a month earlier. The weakness in the US dollar gives a certain support to the EURUSD parity, but decent offers are in
play below the 1.12 mark. The narrowing rate differential favours a stronger euro against the US dollar in term, hence price retreats could
be interesting dip-buying opportunities for strengthening core euro long positions.
In the UK, the claimant count change may have
jumped to 21.4K in February from 5.5K a month earlier. This is typically a figure that should get significantly worse from next month as
business shutdowns will cause thousands of additional job losses, at least in the short run. Besides, the European governments are busy
fighting the coronavirus, which means that the Brexit negotiations are, and will be inevitably disrupted. So far, Boris Johnson sticks to
his Brexit deadline, decreasing the probability of clinching any exit deal with the European governments. Sterling will likely remain
under the pressure of no-deal Brexit anxieties at a time when it most needs the economic support of other countries, and the BoE doves. Cable
could extend losses toward the 1.20 mark.
Finally, retail sales in the US are seen 0.2% higher in February versus last month’s 0.3%, but it’s a
matter of time before we see the sales growth number turning negative in the US as well.
With the deluge of economic data which should
confirm the heavy negative impact of the coronavirus on world economy and investors’ disinterest in monetary and fiscal measures to
contain the crisis, we believe that there is a growing chance of seeing additional short-selling bans to cool off the downside pressure on
the financial markets in the immediate future.
By Ipek Ozkardeskaya