The focus this week will continue to be on whether the economic recovery from the global lockdown will be sharp or slow.
Despite evidence from the World Health Organization that cases are rising faster than before, with nearly a quarter of a million in the past 24 hours alone, and that previous Covid sufferers lose immunity within months, the stock markets have been racing ahead this morning as signs emerge that spending is recovering and economies are fighting back.
There were also signs that the public is taking a more forensic, less panicky attitude to the virus, with masks being worn indoors but activity increasing outdoors. This week in the UK many more activities and businesses can open, as diverse as outdoor swimming pools, beauty salons and National Trust properties. At the same time, as the furlough scheme starts to taper we can expect news of more job losses, especially on the high streets and travel industry.
This week we have a huge amount of vital data releases. Most are bound to show significant monthly increases from early in the lockdown but massive decreases year-on-year. V-shape or L-shape is still the question, and analysts will be looking for more innovative data resources for answers.
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GBP: Is the economy set for lift off?
Sterling starts the week 1% above last Monday against the euro and a little more than that against the US dollar. Economic data and Brexit trade talks will determine whether that continues through the week, although the evidence is hopeful.
Some signs of recovery were in the air over the weekend, as vapour trails disturbed the clear blue skies over southern England for the first time in nearly four months.
It’s certainly a big week for data, with GDP, Balance of Trade and a whole host of production and construction output tomorrow, the inflation rate on Wednesday, unemployment, earnings and consumer confidence on Thursday.
Before all that, governor of the Bank of England Andrew Bailey will be making a couple of speeches today, so the markets will be watching out for any interesting commentary.
News on trade talks should emerge at the end of the week so it could be a bumpy ride.
EUR: European unity under spotlight
The single currency starts the week marginally higher than last Monday against USD, though it was a choppy sort of week.
Successful Brexit talks later this week should benefit the EUR globally, if not against GBP, but there are two tests of EU unity this week and it looks to have already failed the first.
Exit polls for the Polish general election suggest that the problematic (for the EU) Law and Justice Party, under Andrezej Duda, have won, which is Euro-skeptic and threatens EU unity.
Then on Friday we’ll hear about the ‘Next Generation EU’ proposals on finance for the most Covid-affected EU countries.
This week’s EUR-influencing data includes: economic sentiment index across the EU tomorrow, followed by European-wide new car registrations on Thursday morning. Then we have the all-important ECB interest rate decision on Thursday lunchtime (although no change to rates is anticipated from Christine Lagarde). There is inflation data and construction output across the EU to finish the week, although Germany, Italy and France will have been announcing theirs across the week.
USD: Daily cases hit new record
New daily Covid cases are setting new records, with 64,000 nationally, while Florida has taken over as the worst pandemic-affected US state now, just in time to wreck the vacation season. There were over 15,000 new cases there on one day over the weekend.
Even President Trump has started wearing a mask.
The USA also has a big week for data, starting with: inflation rates tomorrow, import, export and industrial production on Wednesday, retail sales and initial jobless claims on Thursday and various housing and construction data on Friday.