Week Ahead – Reopening economies appear to be the only trade in town

It seems financial markets continue to ignore the terrible economic data and focus on hopes that the economy will see a rapid turnaround.  With over 85% of companies in the S&P 500 done with earnings season, Wall Street will remain fixated with efforts to reopen the economy and the spread of the virus.  If additional COVID-19 spikes in the country are worse than the first wave, it will be hard for governors to keep moving forward with their reopening plans.

New York City appears to be finally ahead of the virus and optimism is growing that we could be seeing light at the end of the tunnel.  Governor Cuomo will not loosen restrictions early, but if the daily number of hospitalizations, rate of new infections, and COVID-10 related deaths continue to decline, he could reopen parts of upstate on May 15th, and hopefully New York City later in the summer.

The bond market seems to be trying to tell us something after the 2-year yield Treasury yield fell to a record low on Friday.  Risky assets have had a great week, with US stocks steadily climbing higher, while commodity currencies finished much stronger, but if the bond market is right, the risky asset rally might be ending soon.

The week ahead will have a tremendous amount of focus with the Chinese recovery, as critical April economic data will show how fast their economy is bouncing back.  China’s pickup in economic activity will be the template many will use for outlining what will happen in Europe and the US.  The easing of lockdown conditions globally along with the risk of a spike of new COVID-19 cases will also be critical for the next couple of months.  All eyes will be on Fed Chair Powell on Wednesday morning as investors look for some clarity as to how much more stimulus can financial markets expect.

Key Economic Releases and Events

Saturday, May 9th

  • Spain may release further details about easing lockdown restrictions

Sunday, May 10th

  • K. Prime Minister Boris Johnson lays out a roadmap for easing the U.K.’s lockdown. Some measures are expected to be effective as soon as May 11.
  • 7:50pm JPY BOJ summary of Opinions
  • 9:00pmNZD ANZ Business Confidence: No est v -66.6 prior

Monday, May 11th

  • Brexit talks resume with EU
  • 4:00am EUR Italian Industrial Production M/M: -20.0%e v -1.2% prior
  • 9:30pm AUD NAB Business Confidence: No est v -66 prior
  • 9:30pm CNY Apr CPI Y/Y: 3.7%e v 4.3% prior; PPI Y/Y: -2.6%e v -1.5% prior
  • 11:35pm JPY Japan to sell 10-year bonds

Tuesday, May 12th

  • US Supreme Court to hear a set of cases involving subpoenas for President Donald Trump’s financial records
  • Norway presents revised budget for 2020
  • 1:00am JPY March Preliminary Leading Index: 84.0e v 91.7 prior
  • 6:00am USD NFIB Small Business Optimism: 88.0e v 96.4 prior
  • 8:30am USD Apr CPI M/M: -0.7%e v -0.4% prior; Y/Y: 0.4%e v 1.5% prior
  • 10:00am Fed President Patrick Harker discusses the impact of Covid-19
  • 10:00am Fed Vice Chair for Supervision Randal Quarles testifies before the Senate
  • 1:00pm USD US to sell 10-year Notes
  • 2:00pm USD Apr Monthly Budget Statement: No est v -$119.1B prior
  • 8:30pm AUD Westpac Consumer Confidence SA M/M: No est v -17.7% prior
  • 9:30pm AUD Wage Price Index Q/Q: 0.5%e v 0.5% prior
  • 10:00pm New Zealand Central Bank (RBNZ) Interest Rate Decision: Expected to keep Cash Rate unchanged at 0.25%. Press conference to follow shortly afterwards


Wednesday, May 13th

  • Earnings: Tencent Q1 results
  • OPEC Monthly Report
  • 2:00am GBP UK Q1 Preliminary GDP Q/Q: -2.6%e v 0.0% prior; Y/Y: -2.2%e v +1.1% prior
  • 2:00am GBP Mar Manufacturing Production M/M: -6.0%e v +0.5% prior; Industrial Production M/M: -5.8%e v +0.1% prior
  • 5:00am EUR Mar Industrial Production M/M: -12.0%e v -0.1% prior
  • 5:30am EUR Germany to sell 30-year bonds
  • 8:30am USD Apr PPI Final Demand M/M: -0.4%e v -0.2% prior
  • 9:00am USD Fed Chair Powell speaks on economy
  • 10:30am Crude Oil Inventories
  • 1:00pm US to sell 30-year bonds
  • 9:30pm AUD Apr Employment Change: -450Ke v +5.9K prior; Unemployment Rate: 7.8%e v 5.2% prior
  • 10:00pm NZD New Zealand Government Budget
  • 11:35pm JPY Japan to sell 30-year bonds

Thursday, May 14th

  • IEA Monthly oil market report
  • 2:00am JPY Apr Preliminary Machine Tool Orders Y/Y: No est v -40.7% prior
  • 4:00am EUR ECB Economic Bulletin
  • 6:30am GBP BOE Gove Bailey speaks on webinar
  • 8:30am USD Weekly Initial Jobless Claims
  • 8:30am CAD Manufacturing Sales M/M: No est v 0.5% prior
  • 10:00am CAD Bank of Canada to release Financial System Review
  • 2:00pm MXN Mexico Central Bank (Banxico) Interest Rate Decision: To cut Overnight Rate by 50 bps to 5.50%.
  • 6:30pm NZD Apr Business Manufacturing PMI: No est v 53.2 prior
  • 7:50pm JPY Apr PPI Y/Y: -1.4%e v -0.4% prior
  • 10:00pm CNY China Apr Industrial Production Y/Y: 1.5%e v -1.1% prior; Retail Sales Y/Y: -6.0%e v -15.8% prior; Fixed Asset Ex Rural YTD Y/Y: -9.0%e v -16.1% prior

Friday, May 15th

  • 2:00am EUR Germany Q1 Prelim GDP Q/Q: -2.3%e v 0.0% prior; WDA Y/Y: -2.0%e v +0.4% prior
  • 5:00am EUR Eurozone Q1 Prelim GDP Q/Q: -3.8%e v -3.8% prior; WDA Y/Y: -3.3%e v -3.3% prior
  • 8:30am USD Apr Retail Sales Advance M/M: -11.0%e v -8.7% prior
  • 8:30am USD May Empire Manufacturing: -65.0e v -78.2 prior
  • 9:15am USD Apr Industrial Production M/M: -11.4%e v -5.4% prior; Capacity Utilization: 65%e v 72.7% prior
  • 10:00am USD May Preliminary Michigan Sentiment: 67.5e v 71.8 prior

Sovereign Rating Updates after the close:

  • Fitch on Austria
  • Fitch on France
  • S&P on Iceland
  • S&P on Israel
  • Moody’s on Austria
  • S&P on Netherlands



Financial markets remain primarily focused on the spread of COVID-19 and as US states reopen economies and ease coronavirus lockdowns. The economic data devastation is mostly priced in and risk appetite seems like it will remain healthy as long the Fed and US government continue to signal more monetary and fiscal stimulus is in the pipeline.

US-Chinese relations are also providing some uncertainty for the global economic rebound story. Tensions between the world’s two largest economies could derail much of the reopening optimism that has eased demand for safe-havens.  President Trump appears focused with the November election and will likely keep up the verbal pressure on China but fail to deliver any harsh action that will threaten the second half economic recovery.

US Politics

The Presidential election is less than six months away and former VP Joe Biden needs to pick who will be his running mate.  Biden has promised his VP selection would be a woman, but it should not be ruled out that he might have to cave on the idea and go with Governor Cuomo.  The New York Governor handling of the handling of coronavirus has made him a favorite among many on the East Coast, but his likeability is questionable for the Midwest.  Biden will turn 78 a few weeks after the election, so his VP selection will be critical for many voters.


Boris Johnson is expected to announce on Sunday that the lockdown will remain in place for another three weeks but restrictions will be eased a little, the first step towards the new normal.

The Bank of England opted against easing monetary policy on Thursday, despite moving the announcement to earlier in the day, which led to speculation that more easing was coming. The BoE stands ready to do more and will meet multiple times before June, when the additional bond purchases announced in March are completed.


Europe continues to see restrictions being gradually lifted in various countries and all eyes will be on the experience here in the coming weeks to see what can be expected elsewhere. But the data is heading in the right direction and governments are acting with strong caution which will give people hope that further restrictions won’t be needed in the future.


The currency slumped to its lowest level ever against the US dollar as concerns grew about the Turkish economy in the face of the coronavirus crisis. The economy was already in a bad way and the latest developments forced the banking regulator to restrict access to lira transactions, an attempt to prevent short speculation in the currency. Not only did this shore up the currency, it exacerbated the declines. Challenging times ahead for the country.


The economic recovery is expected to continue in China, and a wrath of data is supposed to confirm it.  China’s big economic releases this week should show improvements to industrial production, retail sales and property investment, while the PBOC maintains monetary easing and support with credit expansion.


India’s government has loosened up lockdown rules and financial markets will carefully watch to see how bad the next wave of cases will be.  India will see some inflation in April, but it is expected to be short-lived.  The RBI remains committed to easing and should not be switching stances anytime soon.


Australia is expected to have lost over a half-a-million jobs in April.  The coronavirus pandemic has crippled the Australian economy, but hopes are growing that they will reopen by July.


Japan has extended the nationwide state of emergency to the end of May, but will reassess the situation on May 14th. Japan seems poised to lift some measures in some areas that are showing no new cases.  PPI data from Japan will likely confirm the deflationary pressures that have persisted this year.



Oil prices have staged quite the rebound as more countries signal further curtailment of crude production and as crude demand begins to comeback after several states and countries begin to reopen.  Oil prices seem to finally be settling on a range after a constructive two weeks of steady gains.  Energy markets are becoming confident the market will return to balance this summer and that we won’t have a repeat of last month’s contract expiry volatility.


Gold remains stuck in a range as dismal economic data continues to get shrugged off on reopening hopes.  Gold is waiting to see if the next round of stimulus will be significant and that will depend on how the next few weeks go in both Europe and the US.

The consolidation phase still remains with $1,660 providing the floor and $1,750 the ceiling.


Bitcoin must thank Paul Tudor Jones.  Bitcoin’s bullish momentum was supposed to be attributed to a halving event that is finally upon us but growing institutional interest could support significantly higher prices from here.  Bitcoin is likely to see a ‘buy the rumor, sell the news’ reaction following the upcoming halving event.  Bitcoin could see a major pullback, but growing interest should provide major support as long financial markets do not see any major risk aversion selling days.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya