A Week on the Market (04/27 - 05/03): The Time of Central Banks and Intrigues

A Week on the Market (04/27 - 05/03): The Time of Central Banks and Intrigues

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The world keeps fighting the coronavirus, but the victories are rather feeble. The new week of April and the beginning of May (oh my, it is May already!) will be the times of Central Banks and their attempts to soothe the business and economies.

JPY: hoping for the best

JPY: hoping for the best

This time, the Bank of Japan reduced its session from two days to one - it seems like the bank knew quite well what to do. The interest rate remained without change but it was announced that the volume of the buy-backs of corporate debts would be increased, and the access of banks to financing would be optimized. The BoJ plans to have increased the retirement of corporate bonds to 186 billion USD by September. Such volumes are impressive, and the JPY is stabilizing under this influence, so long that the risks for the economy decrease.

USD: all attention to the Fed

USD: all attention to the Fed

On Wednesday, the Federal Reserve of the USA will complete its two-day session. The interest rate in the US now remains in the target range of 0-0.25% per annum. There is no room for a decrease, but the Fed does not need any. What we are interested in this time is the follow-up comments of Jerome Powell, the head of the Fed.

He is likely to say that the economy is struggling but the government is doing its best. He might especially note the roller-coaster on the labor market but promise that everything is under control, and there are workplaces for this whole army of the unemployed. Most probably, Powell will try to soothe the capital market the way he always does and assure the people that everything is under control; the better he will do it, the calmer will the USD be.

The US GDP: should we worry?

The US GDP: should we worry?

Apart from the Fed and its decisions, there is something heart-pounding for the USD in the flow of statistics. This will be the first publication of the US GDP in the first quarter of 2020. The forecasts are that the economy has slumped by 4% after the preceding growth of 2.1%. The decline will hardly surprise anybody as there is nothing else to expect but it will definitely scare everybody. The extent of negative reactions will directly depend on the depth of the slump.

The ECB will try to calm everyone down

The ECB will try to calm everyone down

On Thursday, April 30th, the European Central bank will have another session. The interest rate is most likely to remain at zero, while the deposit rates will probably remain negative. However, here, as with the Fed, we are interested in the press-conference of the head of the bank. There are plenty of financial support mechanisms launched at the European level. Nonetheless, the ministers of finance keep arguing whether there is anything else to be done and how to optimize what they already have. Perhaps it makes sense to buy back a part of their debts beforehand? Anyway, this is for the ECB to decide. The more neutral will be the session, the better for the EUR.

Russia: will self-isolation last, or we may be free?

Russia: will self-isolation last, or we may be free?

This week, the President will speak to the nation once again. On April 30th, the restrictions of the recommended self-isolations expire. People now remain at home at the cost of their employers; however, it is obvious that the peak of the epidemics is yet to be seen, and the time is almost up. The government has already announced the third package of support measures for the economy, which hints on the prolongation and perhaps even toughening of self-isolation. For the RUB, the news is neutral as it is much more dependent on oil, but for the consumer and business, it is grave.




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