Japan factory output, retail sales seen falling more sharply in April: Reuters poll By Reuters



© Reuters. A man works at a factory at the Keihin industrial zone in Kawasaki

TOKYO (Reuters) – Japan’s factory output and retail sales likely fell at the fastest pace in years in April as the coronavirus outbreak hurt the world’s third-largest economy, a Reuters poll found on Friday.

Foreign and domestic demand for Japanese goods has collapsed amid virus lockdowns and supply chain disruptions, adding to views that the economy sank deeper into recession in the current quarter.

Industrial output was expected to fall 5.1% in April from the previous month, the biggest drop since comparable data became available in 2013, the poll of 15 analysts showed on Friday, following a 3.7% decline in March.

“The government issued the emergency status in April due the expansion of the coronavirus impact and overseas economic activity stagnated, which likely pushed down productions of durable goods and capital goods,” said Yusuke Shimoda, senior economist at Japan Research Institute.

Retail sales likely fell 11.5% in April from a year earlier, the fastest pace of decline since March 1998, after a revised 4.7 decline in March.

The government urged people to refrain from going out to prevent the virus’ spread, and department stores and other shops scaled down or temporarily closed their businesses, which damaged retail sales, analysts said.

The trade ministry will announce both factory output and retail sales at 8:50 a.m. Japan time on Friday, May 29 (2350 GMT Thursday).

Japan’s jobless rate was seen rising to 2.7% in April from 2.5% in March and the jobs-to-applicants ratio slipped to 1.33 from 1.39, according to the poll.

“Business conditions worsened significantly in areas such as accommodation, transportation, restaurant and entertainment. Labour demand has also receded,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

Other data is expected to show that Tokyo’s core consumer price (CPI) index, which includes oil products but excludes fresh food prices, likely fell 0.2% in May from a 0.1% slip in April, after oil prices fell and the coronavirus impact pushed down prices, especially in the service sector, analysts said.

The jobs data and the Tokyo core CPI will be released at 8:30 a.m. on Friday.

The economy slipped into recession for the first time in 4-1/2 years in the last quarter, putting the nation on course for its deepest postwar slump.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



As euro zone recession deepens, ECB to scale up bond buying next month: Reuters poll By Reuters



By Richa Rebello

BENGALURU (Reuters) – The euro zone economy’s worst recession on record will be even deeper than predicted less than a month ago, according to a Reuters poll of economists. They also said the European Central Bank will ramp up bond buying next month.

An economic recovery from the coronavirus pandemic, which has claimed nearly 300,000 lives globally, will largely depend on the effectiveness of individual governments in preventing a second wave of infections despite easings of lockdown restrictions.

“The biggest uncertainty now is around the pace of the reopening of the economy. There is a series of risks that are still to the downside…we may have a more prolonged period of confinement measures imposed by law or just behaviourally,” Giada Giani, European economist at Citi, said.

The May 11-14 Reuters poll of nearly 80 economists marks the third downgrade to the economic outlook in a little over a month and is despite the ECB’s adding hundreds of billions of euros to its balance sheet and governments announcing stimulus worth trillions of euros.

The euro zone economy is expected to contract 7.5% in 2020, more than the 5.4% predicted three weeks ago, with the worst of the blow expected this quarter.

After contracting 3.8% in January-March, its sharpest quarter-on-quarter decline since 1995, the latest poll showed the economy shrinking by nearly three times that pace in April-June, by 11.3%, more than the 9.6% predicted last month.

The economy is not expected to make up for that in the second half of this year or next, growing 7.2% and 2.8% in the third and final quarters of 2020, respectively. But the worst-case scenario has the economy contracting in Q3 as well as Q2, showing powerful downside risks to forecasts.

(Graphic: Reuters Poll: Euro zone economic outlook link: https://fingfx.thomsonreuters.com/gfx/polling/gjnpweznkpw/Eurozone%20economic%20outlook.PNG)

Despite the substantial fall in GDP, the unemployment rate is only expected to rise about two percentage points to 9.3% in 2020 from recent lows of 7.4%. That compares with forecasts of a much sharper rise in unemployment in the United States.

“While the lion’s share of this year’s U.S. fiscal stimulus is geared toward smoothing household income through labour market dislocations, European governments have provided firms with wage guarantees and expanded short-time work incentives to reduce labour market dislocations,” economists at JP Morgan said.

The ECB will ramp up the asset purchase programme it launched in response to the pandemic by 375 billion euros at its June 4 meeting, taking the total of assets under this specific programme to roughly 1.13 trillion euros.

That does not include the 20 billion euros per month of purchases already announced in response to a slowdown that had taken hold well before the coronavirus hit Europe. The poll forecast the ECB’s balance sheet, currently at around 5 trillion euros, would expand to 6.5 trillion euros by year-end.

“Monetary policy will be almost maxed out before this recession ends,” Citi’s Giani said. “At the moment, it has the objective of making the usage of fiscal policy easier. The ECB can do this by increasing the size of purchases and extending it beyond this year.”

More than two-thirds of 28 economists said the ECB was likely to follow the U.S. Federal Reserve’s example by adding to its shopping list corporate bonds that have lost investment grade status during the crisis, referred to by some as fallen angels..

“By buying fallen angels, the ECB can limit the fallout of the pandemic,” Spyros Andreopoulos, senior European economist at BNP Paribas (OTC:), said.

“It is a way to reach a broader segment of corporates – a segment that may increase in size now that the ECB recognises the impact of the pandemic will stretch into the medium-term.”

(Graphic: Reuters Poll: European Central Bank policy outlook link: https://fingfx.thomsonreuters.com/gfx/polling/azgvomeglvd/ECB%20draft.PNG)

But this could open the ECB up to even more criticism when it is already dealing with a German Constitutional Court ruling that the central bank would have to prove its bond-buying programme was necessary and proportional.

Over 75% of respondents who answered an additional question – 22 of 29 – said that ruling would not have a long-term impact on the way the ECB sets policy.

(Polling by Sarmista Sen and Sumanto Mondal; Editing by Ross Finley and Barbara Lewis)



China’s April factory activity seen expanding as lockdowns ease: Reuters poll By Reuters


© Reuters. Employees work on a production line inside a Dongfeng Honda factory in Wuhan

BEIJING (Reuters) – China’s factory activity likely rose for a second straight month in April as more businesses re-opened from strict lockdowns implemented to contain the coronavirus outbreak, which has now paralysed the global economy.

The official manufacturing Purchasing Manager’s Index (PMI), due for release on Thursday, is forecast to fall to 51 in April, from 52 in March, according to the median forecast of 32 economists polled by Reuters. A reading above the 50-point mark indicates an expansion in activity.

While the forecast PMI would show a slight moderation in China’s factory activity growth, it would be a stark contrast to recent PMIs in other economies, which plummeted to previously unimaginable lows.

That global slump, caused by heavy government-ordered lockdowns, as well as the cautious resumption of business in China, suggests any recovery in the world’s second-largest economy is likely to be some way off.

“The recovery so far has been led by a bounce-back in production, however, the growth bottleneck has decisively shifted to the demand side, as global growth has weakened and consumption recovery has lagged amid continued social distancing,” Morgan Stanley (NYSE:) said in a note.

“The expected slump in external demand has likely capped further recovery in industrial production.”

The latest official data showed 84% of mid-sized and small business had reopened as of April 15, compared with 71.7% on March 24.

Hobbled by the coronavirus, China’s economy shrank 6.8% in the first quarter from a year earlier, the first contraction since current quarterly records began.

That has left Chinese manufacturers with reduced export orders and a logistics logjam, as many exporters grapple with rising inventory, high costs and falling profits. Some have let workers go as part of the cost-cutting efforts.

A China-based brokerage Zhongtai Securities estimated that the country’s real unemployment rate, measured using international standards, could exceed 20%, equal to more than 70 million job losses and much higher than March’s official reading of 5.9%.

Sheng Laiyun, deputy head at the statistics bureau, said on Sunday migrant workers and college graduates are facing increasing pressures to secure jobs, while official jobless surveys show nearly 20% of employed workers not working in March.

Chinese authorities have rolled out more support to revive the economy. The People’s Bank of China earlier in April cut the amount of cash banks must hold as reserves and reduced the interest rate on lenders’ excess reserves.

It has also guided benchmark lending rates lower to reduce borrowing costs for companies and prop up the economy. The one-year loan prime rate (LPR) was lowered last week.

The private-sector Caixin/Markit Manufacturing PMI, which analysts say focuses more on smaller export-driven firms, is expected to rise to 50.3 in April from 50.1.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Britain suffering worst peacetime downturn ever; recovery may falter: Reuters poll By Reuters


© Reuters. FILE PHOTO: Pedestrians walk along the Southbank in view of skyscrapers in the financial district in London

By Jonathan Cable

LONDON (Reuters) – Britain is in the midst of its deepest downturn in peacetime as the coronavirus pandemic wreaks havoc on the economy, a Reuters poll of economists found, while an expected recovery in the second half is already in jeopardy.

The coronavirus has swept across the world, infecting more than 2.5 million people and killing over 177,000, forcing governments to impose strict lockdowns and shutter industries while pushing central banks to unleash unparalleled stimulus.

Britain closed up shop late last month, causing vast swathes of the economy to cease activity, and according to the median forecast in a Reuters April 15-22 poll of nearly 80 economists, gross domestic product will contract 13.1% this quarter. That would be the biggest quarterly drop since World War Two.

As in other Reuters economic polls in recent weeks, those forecasts were hacked from something previously more optimistic – but still dire. Only last month, the median forecast was for a modest 0.3% contraction this quarter.

“The coronavirus crisis is delivering an unprecedented hit to GDP that the economy will take many years to recover from,” said Paul Dales at Capital Economics.

The economy was expected to grow 6.3% next quarter and 3.3% in the final three months of this year, but more than 90% of economists who replied to an additional question said the risks to their second-half forecasts were to the downside.

“If COVID-19 returns with equal, or greater vigour, such that the initial drop in output sticks for several quarters, then it is hard to see a severe financial crisis being avoided,” said Andrew Brigden, chief economist at Fathom.

In the worst case, the economy will contract 15.0% this quarter, the median showed, and 11.4% across 2020. The base case was for a 5.0% contraction in 2020 and growth of 4.0% next year.

Earlier this month, the International Monetary Fund forecast the British economy would contract 6.5% this year and grow 4.0% next year.

The most pessimistic base case in the Reuters poll was for a 35% contraction this quarter and for the worst case 40%. Respondents gave a median 100% chance of a recession within a year.

Last week, the Office for Budget Responsibility warned Britain’s economy might shrink 13% this year because of the coronavirus shutdown, its worst recession in three centuries, and contract 35% this quarter.

A purchasing managers’ index due to be published later on Thursday, the first key indicator for April, is expected to show activity contracted at the fastest rate by far this month since the survey began over 20 years ago. reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/econ-polls?RIC=GBPMCF%3DECI reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/econ-polls?RIC=****%3DECI

Half of the 22 economists who responded to another extra question said the recovery would be U-shaped. Four said it would be V-shaped, four said tick-shaped while three said W-shaped.

“The pace of the recovery will be muted by demand constraints as consumers and firms will not come unscathed out of these lockdowns,” said Stefan Koopman at Rabobank.

LENDING SUPPORT

The centrepiece of the British government’s plans to protect the economy is its pledge to pay 80% of wages if staff are put on leave rather than let go. It has also launched a 330 billion- pound lifeline of loan guarantees to businesses.

For its part, the Bank of England slashed Bank Rate to a record low of 0.10%, restarted its quantitative-easing programme and agreed to temporarily lend the government money if needed to help finance its massive COVID-19 spending plans.

“The Bank of England has made the government’s transaction account limitless until (so far) the end of the year, which means that the UK government can – literally – print its own money without first issuing debt and then wait for the central bank to buy it in the secondary market,” said Erik Nielsen at UniCredit.

But despite the huge amounts of fiscal and monetary stimulus, the Bank’s chief economist, Andy Haldane, warned on Tuesday the economy was not certain to recover rapidly once coronavirus restrictions were lifted, because people may be reluctant to spend or socialise as they did before.

When asked if the central bank was done with announcing new policy measures, over 60% of respondents to an extra question said no, most likely by increasing its quantitative easing programme.

The Bank Rate, however, was expected to remain at 0.10% at least until the end of 2021.

(For other stories from the Reuters global long-term economic outlook polls package)

(Polling by Manjul Paul and Sumanto Mondal)



Investors trim bearish bets on Asia FX on coronavirus recovery hopes: Reuters poll By Reuters


© Reuters. FILE PHOTO: An employee of a money changer holds a stack of Indonesia rupiah notes before giving it to a customer in Jakarta

By Nikhil Nainan

(Reuters) – Investors trimmed short positions on Asian currencies, a Reuters poll showed, as China tries to jump-start its economy that has been ravaged by the coronavirus pandemic, and as a slew of measures by the U.S. Federal Reserve eased worries about dollar liquidity.

Investors were still bearish on all Asian currencies amid the coronavirus-driven rout, although signs emerged showing that virtual lockdowns and massive stimulus have started to help stem the spread of the outbreak and contain its devastating economic impact, the poll of 14 respondents showed.

Analysts said the trimming of bearish positions was aligned with significant central bank injections that have stabilised emerging markets, increased dollar funding and a potential peak in COVID-19 cases.

The Federal Reserve’s aggressive measures to cushion the impact of the pandemic on the U.S. economy also led to some reduction in dollar demand, easing pressure on bond and currency markets in Asia.

Bearish positions on the Indonesian rupiah fell from two weeks ago to their lowest since early March, after the central bank secured a $60 billion repo line with the Fed.=>

The facility helped the battered currency post its first weekly gain in four last week.

This week, Bank Indonesia opted for the stability of the rupiah – a carry trade favourite – when it kept interest rates unchanged, but cut the amount of cash banks must hold in reserve to boost liquidity.

Investors expect China, whose mammoth economy is revving up again and is a key trading partner for much of the region, to aggressively ramp up stimulus beyond the policy support announced on Wednesday.

Short bets on the yuan fell to their lowest since the start of December last year.=cfxs>

However, a sure-footed near-term economic recovery seems unlikely at this point as first-quarter GDP data on Friday is expected to show the first quarterly contraction since at least 1992.

“Markets are willing to believe that policy support will be significantly enhanced this year,” said Wei Liang, a macro strategist at DBS Bank, pointing to a likely increased fiscal spending despite sketchy details at this point.

Two countries that have been largely successful in their efforts to contain the virus were South Korea and Taiwan , and while investors had raised short positions on their currencies as the outbreak took hold, they have now lowered their bets to early-to-mid-March lows.=tp>=kftc>

Short bets on the Indian rupee were also marginally trimmed just as the government extended a massive lockdown this week to early May.=in>

The emerging market currency positioning poll is focused on what analysts and fund managers believe are the current market positions in nine Asian currencies: the , South Korean won, Singapore dollar, Indonesian rupiah, Taiwan dollar, Indian rupee, Philippine peso, Malaysian ringgit and Thai baht.

The poll uses estimates of net long or short positions on a scale of minus 3 to plus 3. A score of plus 3 indicates the market is significantly long U.S. dollars.

The figures include positions held through non-deliverable forwards.

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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China’s new yuan loans set to rise in March as lenders help fight pandemic: Reuters poll By Reuters


© Reuters. FILE PHOTO: Illustration photo of a China yuan note

BEIJING (Reuters) – China’s new bank loans are expected to have rebounded in March from a sharp drop the previous month, a Reuters poll showed, as policymakers continue to urge lenders to help cash-strapped companies hit hard by the coronavirus crisis.

Chinese banks are estimated to have issued 1.80 trillion yuan ($254.70 billion) in net new yuan loans last month, nearly doubled from 905.7 billion yuan in February and higher than 1.69 trillion yuan a year earlier, according to the median estimate in a Reuters survey of 31 economists.

After a record growth in credit in January, new lending dropped sharply in February, which analysts attributed to seasonal factors.

But if the March reading meets forecasts, total bank lending in the first quarter of this year would reach an all-time high of 6.05 trillion yuan, reflecting a stepped up easing by the central bank to support the world’s second-biggest economy.

On Friday, the central bank cut the amount of cash that small banks must hold as reserves, releasing around 400 billion yuan in liquidity to shore up the economy. The latest RRR cut, effective as of April 15 and May 15, would be the third so far this year and the 10th since early 2018.

Policy sources have told Reuters the PBOC is likely to step up policy easing to support the coronavirus-ravaged economy, including cutting the benchmark lending rate on April 20, following a 20 basis point cut in the 7-day reverse repo rate on March 30.

Beijing has been leaning more heavily on fiscal stimulus to weather the downturn, cutting taxes and issuing local government bonds to fund infrastructure projects.

Local governments issued a total 1.6 trillion yuan in bonds in the first quarter of this year, including 1.1 trillion yuan in special bonds, the finance ministry has said.

China will issue more quotas on local governments’ special bonds to support key projects, and all regions should strive to complete the issuance in the second quarter, according to a cabinet meeting chaired by Premier Li Keqiang at the end of March.

Any acceleration in special bond issuance could help boost total social financing (TSF), a broad measure of credit and liquidity.

In March, TSF is expected to rise to 2.8 trillion yuan from 855 billion yuan in February.

Broad M2 money supply growth in March was seen at 8.8%, the same as the previous month.

Annual outstanding yuan loan was expected to grow 12.1% for March, the same as for February.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Aussie and kiwi may be past the worst, if analysts right: Reuters poll By Reuters


© Reuters. Illustration photo of Australian dollars

By Wayne Cole

SYDNEY (Reuters) – Analysts think the worst may already be over for the hard-hit Australian and New Zealand dollars and see them slowly regaining ground over the year ahead, a surprising mark of faith given the economic carnage caused by the coronavirus.

Analysts polled by Reuters see the at $0.6020 in one month, just under the $0.6055 level it was trading at on Friday.

That was a steep downgrade from the $0.6700 predicted in the last poll in February, reflecting the wild swings seen since then. Indeed, the market was so manic a poll could not be conducted properly in March.

The Aussie plunged from $0.6700 to a 17-year low of $0.5510 in a nine-day period in early March, as the spread of the virus sent global markets into a tailspin.

Now, the median forecast was for the Aussie to creep up to $0.6100 in three months, $0.6300 in six and $0.6600 on a one-year horizon.

Yet estimates ranged widely – from $0.5200 to $0.6800 on a three-month view – reflecting uncertainty on how long the economic impact of the pandemic might last.

Economists fear Australian output (GDP) could fall by 5% or more this quarter, from the first quarter, even though the Reserve Bank of Australia (RBA) cut rates to a record low of 0.25% and the government launched a massive stimulus package.

With much of the world also shut down, that is a wall of worry to climb for a commodity-leveraged currency such as the Aussie.

“Growing fears that prolonged shutdowns around the world will exacerbate the global economic contraction will keep AUD and NZD on the back foot in our view,” said Joseph Capurso, a senior currency strategist at CBA.

“We still expect AUD to fall to $0.5700, and probably lower, while NZD is heading for $0.5500, and probably lower.”

The has fared almost as badly as the Aussie in the past month, tumbling to a decade low of $0.5469 at one stage in March, before bouncing somewhat to $0.5895.

Again median forecasts suggested it was near a floor, with $0.5900 seen in one month and $0.6000 in three. Estimates ranged all the way from $0.5200 to $0.6500.

From there, analysts tipped it at $0.6100 in six months and $0.6400 on a one-year horizon.

(Polling by Sujith Pai, Indradip Ghosh and Khushboo Mittal; Editing by Jacqueline Wong)

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Central European FX could begin slow rebound after virus hit: Reuters poll By Reuters


© Reuters.

By Miroslava Krufova and Jason Hovet

PRAGUE (Reuters) – Central Europe’s currencies could be over the worst of their pounding as a result of the global coronavirus pandemic, as Hungary’s forint is seen recovering from record lows and the Czech crown gradually firming in the next year, a Reuters poll showed on Friday.

The poll is the first since the pandemic worsened and since investors’ flight to safety pushed central Europe currencies into losses of 6-8% in March.

In the poll, only Romania’s leu and Serbia’s dinar – which have avoided sharp falls – were expected to depreciate over the next year. The forint, crown and Polish zloty should return back to an appreciation path, just on a weaker course.

The forint, already around record lows before the outbreak, was seen regaining 7% from Wednesday’s closing levels to 340 to the euro over the next 12 months – weaker than the 12-month median forecast of 335 a month ago.

After hitting an all-time low of 369.54 on Wednesday the forint bounced back after the central bank announced a new one-week deposit tender available to banks at its 0.9% base rate, which analysts called an implicit rate hike.

The bank said the move could reduce commercial banks’ stock of overnight deposits and manage liquidity in the market better.

“It is very hard to predict what is going to happen to the forint’s exchange rate once the pandemic is over and the economy starts to revive,” Gergely Suppan, senior economist at Magyar Takarek, said. “The new deposit tender… somewhat stabilized the forint.”

“But it is hard to predict its long-term effect,” he added.

Hungary has long had the loosest policy in the region although the other central banks are shifting heavily into easing mode to cushion the blow from the virus.

Government measures to contain the spread have limited daily life limited to essential shopping and going to work. Factories – including major car plants – have idled, shocking the region’s economies and putting them on course for declines in 2020.

The Czech central bank cut its main rate by 125 basis points, to 1.00%, in March. The bank has said it was ready to defend excessive crown moves. It holds foreign reserves equal to 60% of gross domestic product.

The poll, though, sees the crown firming 7.8% to 25.50 to the euro – where it stood before the outbreak.

Similarly, the Polish zloty () was seen rising again over the next 12 months, with the median forecast expecting a 5.8% gain to 4.35 to the euro, close to where it started March.

Romania’s leu () was seen depreciating 1.7% as the government fights to contain a swelling budget deficit – which already had investors concerned before the outbreak.

“The leu has limited space to rally after the virus-related market stress fades as old structural problems remain relevant,” Jakub Kratky, from Generali (MI:) Investments CEE, said.

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Canadian dollar forecasts slashed, bracing for recession: Reuters poll By Reuters


© Reuters. FILE PHOTO: A Canadian dollar coin, commonly known as the “Loonie”, is pictured in this illustration picture taken in Toronto

By Fergal Smith

TORONTO (Reuters) – The Canadian dollar is set to remain at depressed levels over the coming months, with analysts in a Reuters poll slashing their forecasts for the currency as the coronavirus pandemic potentially pushes Canada’s economy into a deep recession.

The has plunged more than 8% since the start of the year, with much of that decline coming over the past month, as the coronavirus outbreak interrupted global economic activity and major oil producers began a price war.

Canada’s economy could be hit particularly hard because it is a major exporter of commodities, including oil, and Canadians carry record debt loads.

“Forecasting is fraught with perils right now as no one really knows how long the virus-related lockdown will last,” said George Davis, chief technical strategist at RBC Capital Markets. “We believe that the Canadian economy will enter a recession in the first half of this year.”

Davis sees second-quarter gross domestic product plunging at an annualized rate of 18% after an estimated 3% contraction for the economy in the first quarter.

The poll of over 30 currency analysts showed they expect the Canadian dollar to weaken only slightly to 1.42 per U.S. dollar, or 70.42 U.S. cents, in three months, from about 1.4175 on Thursday. In March’s poll, the 3-month forecast was 1.32.

But the loonie is then expected to rebound, with strategists forecasting 1.37 in one year.

“We are more optimistic over the longer term for the loonie,” said Hendrix Vachon, a senior economist at Desjardins.

By the summer “the recovery should be strong enough to reduce significantly the level of uncertainty and to fuel demand for currencies such as the Canadian dollar,” Vachon said.

Ottawa is rolling out more than C$200 billion in support for Canada’s economy, including direct aid to Canadians, wage subsidies for businesses, loan programs and tax deferrals, while the Bank of Canada has slashed interest rates to nearly zero and launched a large-scale asset purchase program, quantitative easing, for the first time.

Should oil prices recover, that could also support the loonie.

“Our energy analyst is expecting a decent pick-up when we look towards year-end, with a target of 50 bucks,” said Christian Lawrence, a senior market strategist at Rabobank. “That is CAD positive longer term.”

Oil has recovered some ground since Monday, when it hit an 18-year low at $19.27 a barrel, on hopes that Russia and Saudi Arabia will announce a major oil production cut.

(Polling by Sujith Pai, Indradip Ghosh and Khushboo Mittal in BENGALURU, Editing by Ross Finley and Angus MacSwan)

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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U.S. dollar still favored on gloomy global economic outlook: Reuters poll By Reuters



By Hari Kishan and Rahul Karunakar

BENGALURU (Reuters) – The U.S. dollar will hold sway in the near term, driven by demand for safe assets on a worsening global economic outlook, with other major currencies are at best expected to regain lost ground over the coming year, a Reuters poll found.

The rout in financial markets and near-certain global recession caused by the coronavirus pandemic has caused a scramble to secure dollar funds. That blew up the cost to borrow dollars in funding markets, with three-month FX swap spreads rising to 2008 financial-crisis levels last month.

But those spreads have snapped back after the Federal Reserve’s effort to improve dollar liquidity by making it easier for other central banks to swap their currencies for dollars, pushing speculators to cut their bets in favor of the dollar in the latest week.

“As markets fret anew about the scale of global dollar liabilities, I am impressed by the Fed’s resolve. The exorbitant privilege that the dollar affords the U.S. has a sting in its tail and the Fed is on the scorpion’s case,” said Kit Juckes, macro strategist at Societe Generale (PA:).

“I fancy the Fed to win this one in the end. ‘In the end’, though, doesn’t mean today, and there’s an army of dollar bulls out there taking the other side at the moment.”

The demand for safe-haven assets has pushed the dollar () to rise about 3.5% so far this year and register its best first-quarter performance since 2015.

While the Fed’s monetary policy easing should keep the dollar from surging, the dire economic outlook – confirmed by Reuters polls of economists, fixed-income strategists and long-term investors – was expected to keep the dollar’s gains this year intact in the near term. [ECILT/WRAP] [US/INT] [ASSET/WRAP]

“The global economy is heading into a recession due to the coronavirus and the USD should continue to outperform the most exposed currencies to global trade,” said Roberto Cobo Garcia, FX strategist at BBVA (MC:).

In response to an additional question, about 45% of analysts, 27 of 63, said the dollar would stay around current levels or trade within a range over the next three months. Twenty analysts forecast the dollar would fall; the remaining 16 said they expect it to rise.

“The dollar will do well all year against all the currencies that are dependent on growth. Long dollar trades are best against those overly-dependent on oil exports and the most growth-sensitive currencies – a long list, mostly emerging markets,” said Societe Generale’s Juckes.

“Economists’ forecasts are increasingly being revised in appreciation of how bad the short-term hit is going to be. After that, we’ll get the realization that while you can turn the lights off quickly in a crisis, getting them back on again is a slower business.”

But in a year from now, analysts predict, the dollar will weaken against most major currencies. That is a consensus view they have held as a group for nearly three years now, and so far, an incorrect one.

The euro, which has lost over 2% so far this year, was forecast to take back those losses to trade at $1.13 by this time in 2021.

But in the near term, the common currency, along with sterling and the Canadian dollar, were predicted to be the worst performers against the dollar in April, driven by its safe-haven status.

“We view the U.S. dollar a safe haven based on the fact that it is the world’s reserve currency and also there is an opportunity to hold Treasury debt as a high quality liquid asset – which has been outperforming and should continue to do so,” said James Orlando, senior economist at TD.

The stampede into dollars has hurt most emerging-market currencies, including the Brazilian real, the South African rand and the Russian rouble, which have lost about a quarter of their value and dropped to record lows. [EMRG/POLL]

Asked which emerging-market currencies will be the hardest hit in April against the dollar, a majority of analysts who responded chose those three currencies.

The Indian rupee, which fell to a record low on Wednesday, was expected to remain weak, with a significant minority of respondents predicting it would depreciate beyond that recent record low at some point over the next year. [INR/POLL]

Reuters poll graphic on U.S. dollar outlook https://fingfx.thomsonreuters.com/gfx/polling/dgkvlxrevbx/Reuters%20Poll%20US%20dollar%20outlook.PNG

(Polling by Khushboo Mittal, Sujith Pai and Indradip Ghosh; editing by Ross Finley, Larry King)