Financial
markets' participants will follow interest rate decisions by the Federal
Reserve and the European Central Bank this week, as well as some important data
on economic growth that will reflect the impact of the spread of the Corona
virus.
It
is necessary to note that the indicators of manufacturing and services for the
month of April released from the Chinese economy are expected to be of great
importance, as they will reflect the extent of economic damage caused by the virus
on vital sectors in the beginning of the second quarter.
US
Dollar
The
US dollar will remain in focus, as investors will follow the Federal Reserve's
interest rate decision and some important economic data released from the
United States.
Expectations
indicate that the Fed will keep interest rates unchanged this week after the
Fed announced massive stimulus plans during the recent period, but there will
be a follow-up to the press conference that will give a talk about the state of
the US economy.
Among
the most important reports due this week is the first GDP reading, which may
show a contraction of 4.1 percent in the first quarter on an annual basis, compared
to a growth rate of 2.1 percent recorded in the last quarter of 2019.
The
final PMI report for the manufacturing sector for April will also be of
interest to investors, as it may confirm a contraction of 36.9, following March's
reading of 48.5.
Also,
some data on the housing and manufacturing sectors, as well as consumer
confidence, may receive some attention from investors.
Euro
The
euro will most likely be affected by the European Central Bank interest rate
decision, as well as some important data, which includes growth, inflation and
unemployment.
The
ECB is expected to keep interest rates at their current low rates after the
bank unveiled stimulus plans to support the European economy in light of the
Corona crisis, but the press conference will be carefully watched as it may
provide an update about the economy.
In
terms of economic data, the most prominent report this week will be the
preliminary GDP reading for the first quarter, which may show a contraction of
3.2 percent, compared to the growth rate of 0.1 percent recorded in the final
three months last year.
Investors
will also focus on inflation data, where the flash eurozone CPI is expected to
drop to 1.0 percent in the year ended April from the previous reading of 0.7
percent.
Pound
Sterling
This
week, the UK will release its final manufacturing PMI for April, which will
probably confirm the collapse to 32.9 in April, after registering 47.8 in
March. Other than this report, the pound might move according to the general
market sentiment.
Commodities
Gold
recorded a strong weekly gain last week, amid fears of a global recession due
to the Corona virus, even as central banks continued to launch a wave of
stimulus measures.
The
yellow metal this week will largely depend on the Fed's interest decision and
Jerome Powell's remarks at the press conference, in addition to the important
economic data released from major economies.
With
regard to crude oil, prices fell by the end of last week to report their third
consecutive weekly loss since production closures failed to keep pace with the
declining demand due to the emerging crisis of the Coronavirus.
Oil price movements
this week will depend on virus developments, besides the weekly US government
report tracking the change in crude inventories.