German ZEW Survey Continues Its Descent

Fundamental analysis of Forex market


  • Risk-off sentiment in Europe was initial buoyed by concerns of stemming the coronavirus outbreak. Dealers cited a Thursday draft of the clinical trial results for COVID-19 hopeful drug remdesivir did not speed up improvement in patients in China or prevent them from dying
  • German IFO Survey continued its plunge as coronavirus lockdowns plays havoc on sentiment (Business Climate at 74.3 v 85.9 prior months’s reading


  • China PBoC conducted a 1-year Targeted Medium-term Lending Facility (TMLF) for the 5th time ever at rate of 2.95% (20bps below prior operation); allotted CNY56.1B (Insight: – Note: The Targeted MLF rate cut of 20bps was in line with the recent 20bps cut to 1-year LPR and MLF operations
  • Japan Mar National CPI came in-line with expectations but remained well below target leve. Data sparks deflation fears. (CPI YoY: 0.4% v 0.4%e; CPI Ex-fresh food (core) YoY: 0.4% v 0.4%e (Reminder: BOJ meets early next week)
  • Japan Fin Min Aso stated that was hot hearing from BOJ whether to scrap bond buying cap; Could not say now whether it’s right or wrong to maintain BOJ bond buying cap. Had not spoken with BOJ about unlimited bond buying but believed it was important to make things flexible


– advertisement –
  • Total Global cases 2,708,885 (+3.1%); total deaths 190.9k (+4.1%)
  • President Trump: Might extend social distancing guidelines until summer, until we felt safe


  • EU leaders talks ended with no agreement on recovery package (as expected); European Commission tasked with presenting a formal proposal by May 6th
  • German Chancellor Merkel stated that EU leaders did not agree on every point but agreed to work together. EU could not continue as usual after crisis and expected higher contributions to next EU budget from Germany
  • Italy PM Conte: stated that EU leaders had made great progress on coronavirus response that was unthinkable until a few weeks ago and leaders agreed that coronavirus recovery fund was urgent
  • European Commission President Von Der Leyen: To propose increase budget headroom to raise funds against guarantees from member state. Recovery investment would be frontloaded, necessary to find balance between grants and loans
  • EU Council President Michel: Leaders endorsed €540B support package and agreed to coordinate gradual lifting of Covid-19 restrictions, monitor situation with eye on summer holiday season approaching
  • PM Johnson to be back in office on Monday, Apr 27th to reassert control over coronavirus crisis
  • Apr Preliminary GFK Consumer Confidence: -34 v -40e but Too soon to say if the decline in consumer confidence had bottomed out


  • House voted to pass $484B coronavirus package bill to boost small business program and hospitals
  • President Trump to sign coronavirus stimulus plan on Friday [as expected), signing to occur during a ceremony at 12 PM EST (16:00 GMT)



  • Indices [Stoxx600 -0.88% at 330.54, FTSE -1.09% at 5,762.89, DAX -1.43% at 10,363.00, CAC-40 -1.17% at 4,398.80, IBEX-35 -1.76% at 6,628.00, FTSE MIB -0.99% at 16,842.50, SMI -0.01% at 9,624.12, S&P 500 Futures -0.03%]
  • Market Focal Points/Key Themes: European indices open lower across the board and remained lower as the session progressed; financial sector among worst performers; consumer discretionary mildly supported; reportedly UK to expaind SME loan facilities; IAG unit Iberia reportedly seeking financing from banks; upcoming earnings expected in the US session include American Express, Autoliv and Verizon.


  • Consumer discretionary: Nestle [NESN.CH] +2% (earnings), Lufthansa [LHA.DE] -8% (rescue plan), Pearson [PSON.UK] -3% (trading update)
  • Energy: Eni [ENI.IT] -2.5% (earnings; outlook cut), Neste Oil [NESTE.FI] -2% (earnings)
  • Healthcare: Sanofi [SAN.FR] -1.5% (earnings)
  • Technology: Signify [LIGHT.NL] +8% (earnings)


  • German Fin Min Scholz: stated that EU had acted quickly to offset economic impact of virus. EU needed its own sources of income and more integration. Stressed that heavily indebted member States were facing a great challenge
  • EU official Breton stated that Euro Zone 2020 GDP towards an contraction of 7.5% due to the coronavirus outbreak
  • German IFO Economists noted that the domestic economy was in its toughest time since reunification. Companies had never been so pessimistic about the coming months. Would have signs of a recovery by mid-year but would not be a “V” shape

Currencies/Fixed Income

  • EUR/USD was at 1-month low below the 1.0750 level in the aftermath of the EU Leader tele-conference call on a regional recovery plan. Eurogroup painted an optimistic picture of bloc solidarity and agreed on proposals for emergency help. Markets instead focused on the member differences over specifics of any plan particularly on grants or loans aspects. The Euro faced headwinds as the German IFO continued its descent.
  • USD/JPY slightly higher at 107.70 after Japan Apr CPI data sparked concerns of deflation. More talk circulating that BOJ was considering unlimited government bond buying in further easing measures ahead of next week’s scheduled policy meeting.

Economic Data

  • (FI) Finland Mar PPI M/M: -3.0% v -1.1% prior; Y/Y: -5.6% v -2.8% prior
  • (UK) Mar Retail Sales (ex-auto/fuel) M/M: -3.7% v -4.0%e; Y/Y: -4.1% v -4.8%e
  • (UK) Mar Retail Sales (including auto/fuel) M/M: -5.1% v -5.0%e; Y/Y: -5.8% v -5.0%e
  • (NO) Norway Q1 Overall GDP Q/Q: -1.5% v +1.6% prior, Mainland GDP Q/Q: -1.9% v +0.2% prior
  • (ES) Spain Mar PPI M/M: No est v -1.2% prior; Y/Y: No est v -2.2% prior
  • (AT) Austria Feb Industrial Production M/M: -2.4% v +4.7% prior; Y/Y: -2.3% v +1.7% prior
  • (CZ) Czech Apr Consumer Confidence Index: -25.3 v -6.3 prior; Business Confidence: -16.2 v +5.8 prior; Composite Index (Consumer & Business Confidence): -18.0 v +3.4 prior
  • (TR) Turkey Apr Real Sector Confidence (Seasonally Adj): 62.3 v 98.6 prior; Real Sector Confidence NSA (unadj): 66.8 v 99.7 prior
  • (TR) Turkey Apr Capacity Utilization: 61.6% v 75.3% prior
  • (SE) Sweden Mar PPI M/M: -1.2% v -0.6% prior; Y/Y: -3.6% v -1.2% prior
  • (CN) Weekly Shanghai copper inventories (SHFE): 259.0K v 303.4K tons prior
  • (DE) Germany Apr IFO Business Climate Survey: 74.3 v 79.7e; Current Assessment Survey: 79.5 v 80.5e; Expectations Survey: 69.4 v 75.0e
  • (PL) Poland Mar Unemployment Rate: 5.4% v 5.6%e
  • (RU) Russia Narrow Money Supply w/e Apr 17th (RUB): 11.90T v 11.82T prior
  • (TW) Taiwan Mar M2 Money Supply Y/Y: 4.4% v 4.4% prior; M1 Money Supply Y/Y: 7.0% v 7.0% prior

Fixed Income Issuance

  • (IN) India sold total INR210B vs. INR210B indicated in 2022, 2029, 2031 and 2060 bonds
  • (IT) Italy Debt Agency (Tesoro) sold €2.75B vs. €2.25-2.75B indicated in 2-year CTZ; Avg Yield: 1.001% v 0.307% prior; Bid-to-cover: 1.63x v 1.63x prior
  • (IT) Italy Debt Agency (Tesoro) sold €1.0B vs. €0.5-1.0B indicated range in 0.40% May 2030 Inflation-linked Bonds (BTPei); Real Yield: 1.77% v 0.31% prior; Bid-to-cover: 1.52x v 1.92x prior

Looking Ahead

  • 06:30 (RU) Russia Central Bank (CBR) Interest Rate Decision: expected to cut Key 1-Week Auction Rate by 50bps to 5.50%
  • 06:45 (US) Daily Libor Fixing
  • 07:00 (MX) Mexico Feb IGAE Economic Activity Index (Monthly GDP) M/M: -0.2%e v 0.0% prior; Y/Y: -0.6%e v -0.8% prior
  • 07:30 (IN) India Weekly Forex Reserve w/e Apr 17th: No est v $476.5B prior – 08:00 (UK) Daily Baltic Dry Bulk Index
  • 08:00 (RU) Russia Central Bank (CBR) Gov Nabiullina post rate decision press conference
  • 08:00 (IN) India announces upcoming bill issuance (held on Wed)
  • 08:00 (ES) Spain Debt Agency (Tesoro) announces upcoming issuance
  • 08:30 (US) Mar Preliminary Durable Goods Orders: -12.0%e v +1.2% prior; Durables (ex-transportation): -6.3%e v -0.6% prior; Capital Goods Orders (non-defense/ex-aircraft): -6.7%e v -0.9% prior; Capital Goods Shipments (non-defense/ex-aircraft): -7.0%e v -0.8% prior
  • 08:30 (BR) Brazil Mar Current Account Balance: -$0.2Be v -$3.9B prior; Foreign Direct Investment (FDI): $6.5Be v $6.0B prior
  • 09:00 (BE) Belgium Apr Business Confidence: -21.0e v -10.9 prior
  • 09:00 (CL) Chile Mar PPI M/M: No est v -1.2% prior
  • 10:00 (US) Apr Final University of Michigan Confidence: 67.9e v 71.0 prelim
  • 11:00 (EU) Potential sovereign ratings after European close (Moody’s on Romania and Israel Sovereign Debt; S&P on Italy, UK and Greece Sovereign Debt; Fitch on Netherlands Sovereign Debtand Canadian rating agency on Greece Sovereign Debt