Stimulus Hopes Giving Risk Appetite Some Green Shoots

Fundamental analysis of Forex market


  • Risk appetite trying to find fresh legs on hopes that govts will introduce stimulus to combat the coronavirus outbreak impact on global economy (US: payroll tax cut talk; Japan: ¥430B fiscal support package; others include Thailand; Philippines support measures)


  • China Feb CPI registered its first easing in annual pace since Feb 2019 (YoY: 5.2% v 5.4% prior)
  • Japan Fin Min Aso: Govt to announce second package of steps on corona virus; G7 has agreed to take fiscal and monetary steps as appropriate. Not yet considering extra budget to respond to coronavirus; needed to examine the current situation first, when asked about an extra budget . Funding to come from the remainder of this fiscal year’s budget reserve (Note: worth some ¥270B). Believed that fallout in Japan from the global coronavirus outbreak is not akin to a Lehman Brothers-like crisis
  • BOJ Gov Kuroda reiterated that uncertainties increasing due to coronavirus; financial markets have been ‘volatile’


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  • Global cumulative cases 114,443 (+4,402); Cumulative deaths 4,026 (+201)
  • China President Xi has arrived in Wuhan (1st known visit since start of coronavirus)
  • Italy PM Conte confirmed that movement would be restricted throughout the country in effort to combat the spread of the coronavirus. All public gatherings to be banned and stressed that people should not move other than for work and emergencies


  • Ireland govt said to plan to set aside €2.4B for coronavirus response; may have to borrow additional funds for coronavirus response


  • President Trump stated that would discuss possible payroll tax cut with Congress and support for hourly wage earners so they do not miss paychecks. In talks with hotel industry on virus impact and also working with airline and cruise industries
  • Treasury Sec Mnuchin: Having daily conversations with Fed Chair Powell, Trump is committed to use all tools for the economy, working with lawmakers on range of alternatives



  • Indices [Stoxx600 +3.19% at 350.32, FTSE +2.81% at 6,144.95, DAX +2.91% at 10,940.67, CAC-40 +3.27% at 4,861.87, IBEX-35 +3.06% at 7,932.50, FTSE MIB +2.99% at 19,028.40, SMI +3.17% at 9,488.00, S&P 500 Futures +3.83%]
  • Market Focal Points/Key Themes: European stocks open higher and continued positive trend as session progressed; theme of rebound after yesterday’s losses and potential stimulus being discussed by several countries; better performers include energy sector and travel; French banks supported after govmt seeks postponement of stress tests due to coronavirus; releases expected in upcoming US session include Telecom Italia, Dicks and Revlon


  • Consumer discretionary: Deutsche Post [DPW.DE] +7% (annual report; outlook), Informa [INF.UK] +4% (earnings), DFS Furniture [DFS.UK] -2% (earnings)
  • Industrials: Schaeffler [SHA.DE] +7% (earnings)
  • Technology: Infineon [IFX.DE] +8% (CFIUS merger review)


  • Italy Industry Min: Govt to adopt €10B in measures to address the coronavirus outbreak. Govt to ask for a review of the EU’s Stability Pact and fiscal compact rules due to the coronavirus outbreak
  • Sweden Central Bank (Riksbank) Gov Ingves testified that the virus would have negative effects on economic activity but too early to determine the extent and duration of its impact . Economic policy might need to contribute support to affected sectors and access to credit and liquidity
  • Italy business lobby Confindustria: Lockdown to contain spread of coronavirus was warranted
  • Poland Central Bank Hardt stated that he did not believe that loosening monetary policy through rate cuts would have a real effect on supporting the companies
  • Japan PM Abe confirmed to have put together a ¥430B fiscal support package (in-line with speculation)
  • Russia Energy Min Novak: OPEC’s position on deeper production cuts led to OPEC+ disagreement. Noted that panic in oil market seemed to be subsiding. Russia had not closed door for OPEC+ cooperation and saw the next OPEC+ meeting planned for either May and June. Russia could increase production by 300K immediately and up to 500K bpd in near future (**Note: would negate its agreed upon OPEC+ cuts)
  • Saudi Aramco CEO: company to supply its customers with 12.3Mbpd in Apr (**Note: amount would be 300Kbpd above maximum sustained capacity)

Currencies/ Fixed Income

  • Risk appetite was trying to find fresh legs in the session on hopes that numerous govts would introduce stimulus to combat the coronavirus outbreak impact on global economy. Speculation that President Trump would announce a stimulus package that included a payroll helped to temper investors’ pessimism for the time being. Japan did confirm a ¥430B aid measure.
  • USD/JPY tested the 105 level in late Asia on the stimulus hopes but could not muster enough momentum to breach the key resistance level. Pair at 104.30 at mid-EU session but yen was still weaker by 2% from Monday’s level.
  • USD/CHF was higher by 0.6% to move back above the 0.93 level
  • EUR/USD at 1.1370 area with focus on Thursday’s ECB meeting that could provide the prospects for more easing measures
  • The yields in core countries were higher as well with the US 10-year back at 0.70% level and the 30-year yield above 1.15% (both higher by over 15bps in session)

Economic Data

  • (SE) (SE) Sweden Maklarstatistik Feb Housing Prices Y/Y 6% v 6% prior; Apartment Prices Y/Y: 9% v 6% prior
  • (FI) Finland Jan Industrial Production M/M: -0.8% v -0.2% prior; Y/Y: -1.8% v -0.3% prior
  • (JP) Japan Feb Preliminary Machine Tool Orders Y/Y: -30.1% v -35.6% prior
  • (FR) France Q4 Final Private Sector Payrolls Q/Q: 0.5% v 0.2%e; Total Payrolls: 0.4% v 0.3%e
  • (DE) Germany Q4 Labor Costs Q/Q: 0.0% v 1.0% prior; Y/Y: 3.0% v 3.1% prior
  • (NO) Norway Feb CPI M/M: -0.1% v +0.6%e; Y/Y: 0.9% v 1.7%e
  • (NO) Norway Feb CPI Underlying M/M: 0.5% v 0.7%e; Y/Y: 2.1% v 2.3%e
  • (NO) Norway Feb PPI M/M: -3.3% v -1.3% prior; Y/Y: -7.4% v -3.9% prior
  • (DK) Denmark Feb CPI M/M: 0.6% v 0.1% prior; Y/Y: 0.8% v 0.7% prior
  • (DK) Denmark Feb CPI EU Harmonized M/M: 0.4% v 0.2% prior; Y/Y: 0.7% v 0.8% prior
  • (DK) Denmark Jan Current Account Balance (DKK): B v 15.0B prior; Trade Balance: B v 10.6B prior
  • (RO) Romania Q4 Preliminary GDP (2nd reading) Q/Q: 1.5% v 1.5%e; Y/Y: 4.3% v 4.3%e
  • (TR) Turkey Dec Unemployment Rate: 13.7% v 13.5%e
  • (FR) France Jan Industrial Production M/M: 1.2% v 1.8%e; Y/Y: -2.8% v -1.9%e
  • (FR) France Jan Manufacturing Production M/M: 1.2% v 1.7%e; Y/Y: -2.2% v -1.7%e
  • (ES) Spain Q4 INE House Price Index Q/Q: -0.6% v +1.6% prior; Y/Y: 3.6% v 4.7% prior
  • (CZ) Czech Feb CPI M/M: 0.3% v 0.3%e; Y/Y: 3.7% v 3.6%e
  • (HU) Hungary Feb CPI M/M: 0.3% v 0.1%e; Y/Y: 4.4% v 4.3%e
  • (HU) Hungary Jan Preliminary Trade Balance: €0.4B v €0.4Be
  • (SE) Sweden Jan Household Consumption M/M: -0.2% v +0.4% prior; Y/Y: 1.6% v 3.1% prior
  • (NO) Norway Feb Region Output Survey: (past 3-months): 0.89 v 1.06 prior; Output Survey: (next 6-months): 0.83 v 0.96 prior
  • (IT) Italy Jan Industrial Production M/M: 3.7% v 1.6%e; Y/Y: -0.1% v -3.7%e; Industrial Production NSA Y/Y: -3.2% v -1.4% prior

Fixed Income Issuance

  • (EU) EFSF opened book to sell EUR-denominated Jan 2-26 bonds; guidance seen 0bps (flat) to mid-swaps
  • (ZA) South Africa sold total ZAR4.53 vs. ZAR4.53B indicated in 2026, 2030 and 2037 bonds
  • (ID) Indonesia sold IDR8.0T vs. IDR7T target in 6-month Islamic Bills; 2-year, 4-year, 25-year Islamic bonds (sukuk)
  • (ES) Spain Debt Agency (Tesoro) sold total €1.51B vs. €1.0-2.0B indicated range in 3-month and 9-month bills

Looking Ahead

  • 06:00 (EU) Euro Zone Q4 Final GDP Q/Q: 0.1%e v 0.1% prelim; Y/Y: 0.9%e v 0.9% prelim
  • 06:00 (EU) Euro Zone Q4 Household Consumption Q/Q: 0.1%e v 0.5% prior; Govt Expenditures Q/Q: 0.4%e v 0.4% prior; Gross Fix Capital Q/Q: +0.3%e v -3.8% prior (revised from +0.3%)
  • 06:00 (EU) Euro Zone Q4 Final Employment Q/Q: No est v 0.3% prelim; Y/Y: No est v 1.0% prelim
  • 06:00 (GR) Greece Feb CPI Y/Y: No est v 0.9% prior; CPI EU Harmonized Y/Y: No est v 1.1% prior
  • 06:00 (GR) Greece Jan Industrial Production Y/Y: No est v -4.5% prior
  • 06:00 (EU) Daily Euribor Fixing
  • 06:15 (CH) Switzerland to sell 3-month bills
  • 06:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills
  • 06:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)
  • 06:30 (UK DMO to sell £2.25B in 4.75% Dec 2030 Gilts
  • 06:30 (BE) Belgium Debt Agency (BDA) to sell in 3-month and 12-month bills
  • 06:40 (UK) BOE allotment in 6-month GBP-enhanced liquidity repo operation (ILTR)
  • 07:00 (IL) Israel Q4 Preliminary GDP Annualized (2nd reading): No est v 4.8% advance
  • 07:00 (IL) Israel Feb Consumer Confidence: No est v 118 prior
  • 07:45 (US) Goldman Economist Chain Store Sales
  • 08:00 (BR) Brazil Jan Industrial Production M/M: +0.6%e v -0.7% prior; Y/Y: -1.0%e v -1.2% prior
  • 08:00 (BR) Brazil CONAB Corp Report
  • 08:00 (TR) Turkey to sell 2021 and 2026 Bonds
  • 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed)
  • (UR) Ukraine Feb CPI M/M: 0.3%e v 0.2% prior; Y/Y: 3.0%e v 3.2% prior
  • (MX) Mexico Feb Nominal Wages: No est v 5.0% prior
  • 08:55 (US) Weekly Redbook LFL Sales data
  • 09:00 (UK) Daily Baltic Dry Bulk Index
  • 09:00 (SE) Sweden Central Bank (Riksbank) Breman moderates Panel
  • 09:45 (UK) BOE to buy £1.27B in APF Gilt purchase operation (over 15-years)
  • 10:00 (EU) Weekly ECB Forex Reserves
  • 12:00 (US) USDA World Agricultural Supply and Demand Estimates (WASDE)
  • 13:00 (US) Treasury to sell 3-Year Notes
  • 17:45 (NZ) New Zealand Feb Total Card Spending M/M: No est v 0.3% prior; Retail Card Spending M/M: -0.3%e v -0.1% prior
  • 18:00 (AU) RBA Dep Gov Debelle in Sydney
  • 19:00 (KR) South Korea Feb Unemployment Rate: 4.1%e v 4.0% prior
  • 20:30 (AU) Australia Jan Home Loans Value M/M: 3.0%e v 4.4% prior
  • 21:00 (PH) Philippines Jan Exports: No est v $5.7B prior
  • 23:00 (CN) China to sell 2-year and 5-year upsized Government Bond
  • (US) North Dakota, Idaho, Michigan, Mississippi, Missouri and Washington Democratic Caucuses