Archives of “October 19, 2020” day

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ECB’s Lagarde: The options in our toolbox have not been exhausted

  
  Analysis

ECB president, Christine Lagarde, in an interview with Le Monde

ECB president, Christine Lagarde, in an interview with Le Monde
  • ECB will do more if needed
  • Recovery risks losing momentum amid new restrctions
  • Euro is irreversible
Nothing new on offer by Lagarde from the remarks above. She will also be speaking later in the day as Eamonn previewed earlier here.
The point about the recovery losing momentum is a key issue for the euro and the ECB at the moment, as it could prompt policymakers to act again before the year-end.

Oil – there is an OPEC+ JMMC meeting Monday 19 October 2020

  
Analysis, Crude

An online, virtual meeting of the OPEC+ Joint Ministerial Monitoring Committee (JMMC)  today.

The JMMC discuss compliance issues – how OPEC members and friends (the “+” part) are coming along with sticking to agreed output cuts.
The cuts come with the background of a renewed drop in demand due to the fresh wave of COVID-19 outbreaks and the restrictions therefore imposed by governments.
OPEC+ have plans to further scale back production on January 1 from 7.7m b/d to 5.8m b/d. Any firm commitments on this (there are calls for this step in output cuts to be put on hold) will come from the full group meeting on 30 November/1 December, not today. But that does not preclude the usual chatter and headlines. Stay tuned.

China Q3 GDP +2.7% q/q (expected +3.3%)

  
Analysis, Economy

A miss for the data from China, a rare occurrence.

China Q3 GDP

+2.7% q/q

  • expected +3.3% q/q, prior +11.5%

+4.9% y/y

  • expected +5.5% y/y, prior was +3.2%
What will have had a notable negative impact is the recovery in imports into China, but the effect of this is as a depressing impact on GDP. But, strong imports are a sign of economic strength so I suspect there will be a catch up ahead for GDP. Over the weekend PBOC Gov Yi Ganag said he expected positive growth in China for 2020. So far, YTD, economic growth is +0.7 so he looks to be on the oney.

Also out at the same time, ‘activity data for September, which is much better.

Industrial Production 6.9% y/y, helped along by improving exports.

  • expected 5.8%, prior was 5.6%

Industrial Production YTD 1.2% y/y

  • expected 1.0%, prior was 0.4%

Fixed Assets (excluding rural) YTD +0.8% y/y

  • expected 0.9%, prior was -0.3%

Retail Sales +3.3% y/y, indicative of a continued rebound for domestic consumption

  • expected 1.6%, prior was 0.5%

Retail Sales YTD -7.2% y/y

  • expected -7.4%, prior was -8.6%
Market impact so far is a small sell off for risk currencies such as AUD and NZD …. but its small. Stocks in China also off.

FT says 2nd wave means Europe’s economy is sliding towards a double-dip recession … what it means for EUR

  
Analysis, Economy, Forex

Via the Financial Times a key risk for a continued euro rally, a double-dip recession brought on by the 2nd wave of COVID-19 infections gaining pace across the continent.

Germany, France, UK, Italy, Spain, Netherlands have all brought in new restrictions to counter the 2nd wave growth
  • Further restrictions are expected to be announced this week.
“I can’t believe how fast the second wave has hit,” said Katharina Utermöhl, senior economist at Allianz. “We now see growth turning negative in several countries in the fourth quarter — another recession is absolutely possible.”
FT link. (may be gated)
Europe is already looking worse on economic data indications, positioning is also a weight on EUR/USD.
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