Last Week’s FX and Economy Summary Apr 20, 2020

EU eases lockdown restrictions slightly

Some EU governments started to ease coronavirus lockdown restrictions slightly as the number of deaths and new cases started to come under control. Other countries also announced that restrictions would gradually be relaxed over the next two weeks, but France took a tougher stance and extended measures to May 11th

Overall, there was a slight net improvement in confidence over the outlook, although the Euro was unable to make significant headway.

US political divisions increased 

US political divisions were a significant feature during the week with President Trump exerting pressure on state governors to relax measures while political protests against the lockdown measures also increased.  

Equity markets advance further

Global equity markets made further progress amid hopes that lockdown measures would be eased which would help trigger a recovery in the economy later in 2020.

Strength in equity markets was important in providing net support for risk assets including commodity currencies.

Oil prices, however, remained under pressure as demand remained extremely weak and this weakness was a negative factor for the Canadian dollar. 


The retail sales report recorded an 8.7% decline for March, the sharpest decline on record as the lockdown measures undermined demand with very heavy declines in the leisure sector while underlying sales declined 4.5% on the month.

Two regional business confidence surveys registered very sharp declines with both the New York and Philadelphia Fed manufacturing indices declining very sharply to record lows, although both surveys did expect a slight recovery on a 6-month view.

The increase in jobless claims moderated slightly to 5.25mn in the latest week from 6.62mn the previous week, although total claims have amounted to over 22 million in the past 4 weeks which suggested that the unemployment rate had increased to significantly above 10%.


Political developments remained important with some relief that Prime Minister Boris Johnson was released from hospital and recovering slowly from coronavirus. He was, however, unable to resume working and there were concerns that government effectiveness would be damaged.

The government insisted that there would be no extension of the EU transition period even though the timetable remains extremely tight and governments have to focus on coronavirus developments. 

The UK lockdown measures were extended for a further 3 weeks. Sterling was, however, underpinned by a general improvement in global risk appetite. 


Euro-zone governments continued to debate fiscal policy, but there was no breakthrough on issuing coronabonds.

There were increased concerns over the French economy as lockdown measures were extended with the 2020 GDP decline liable to be at least 8%.


Chinese GDP data recorded a 6.8% decline in the year to the first quarter with the net quarterly decline of close to 20% and the worst performance for over 50 years.

Monthly data reported a stronger than expected recovery in industrial production, but retail sales data remained weak. Trade data recorded a smaller than expected decline in exports, but there were concerns that weak global demand would undermine the outlook.

The Bank of Canada made no changes to interest rates, but did expand its bond-buying programme.

Tim Clayton

Tim Clayton is a market analyst with more than 20 years of experience in the financial markets, with particular focus on currencies. Holds an economics degree from University of New York. Writes for multiple publications including and SeekingAlpha so he is on top of all the happening in the world of currencies and macro-economics.

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