Macro Roundup (Jun 5)

SHANGHAI, Jun 5 (SMM) – This is a roundup of global macroeconomic news last night and what is expected in the day ahead.

The euro jumped to a 12-week high against the US dollar on Thursday after the European Central Bank increased stimulus to shore up economies hurt by the coronavirus pandemic.

The dollar index, which gauges the greenback against a basket of major currencies, fell for a eighth straight day and plumbed the lowest since March 12 at 96.5774.

The ECB increased the size of its Pandemic Emergency Purchase Program (PEPP) to 1.35 trillion euros ($1.52 trillion) from 750 billion euros, more than the 500 billion-euro increase most analysts had expected, and extended it until June 2021 at the earliest, with a pledge to reinvest proceeds until at least the end of 2022.

The ECB also announced on Thursday that it has decided to keep its interest rates unchanged, as expected. The rate on the main refinancing operations, marginal lending facility and deposit facility stand at 0%, 0.25% and -0.50% respectively.

Despite the bigger-than-expected expansion of ECB’s stimulus program, European stocks closed lower Thursday, as investor sentiment was shaken after ECB President Christine Lagarde said the eurozone faced an “unprecedented contraction.” The central bank updated its forecasts, saying it now expects the economy to contract by 8.7% this year, before rebounding to 5.2% growth in 2021 and 3.3% in 2022. Those projections were significantly worse than the ECB’s own forecasts in March.

Retail sales in the 19 countries sharing the euro zone fell by 11.7% in April from March and by 19.6% year-on-year, EU statistics agency Eurostat said on Thursday. Both the month-on-month an year-on-year declines were the steepest on record.

On Wall Street, stocks were also lower on Thursday, giving back some of the strong gains for June, as investors grappled with disappointing jobs data.

The US Labor Department said 1.877 million Americans filed for unemployment benefits last week, topping a Dow Jones estimate of 1.775 million. Continuing jobless claims rose sharply, nearly reaching 21.5 million.

That report came ahead to the Labor Department’s monthly nonfarm payrolls report release, which is scheduled for Friday at 8:30 a.m. ET. Economists polled by Dow Jones expect the economy lost more than 8 million jobs in May while the unemployment rate surged to nearly 20%.

Job cuts announced by US-based employers totaled 397,016 in May, down 40.8% from April's total of 671,129, outplacement firm Challenger, Gray & Christmas said Thursday. It's still the second-highest total since the series started in 1993.

Oil prices were little changed on Thursday as investors awaited a decision from top crude producers on whether to extend record output cuts.

The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, a group known as OPEC+, are debating when to hold ministerial talks to discuss a possible extension of the existing cuts.

LME nonferrous metals, except for aluminium, closed higher on Thursday. Lead jumped 1.3% to lead the gains, zinc rose 0.5%, copper gained 0.3%, tin inched up 0.2% and nickel edged up 0.04%.

SHFE nonferrous metals traded mixed, seeing moderate gains or losses, in overnight trading. Copper rose 0.4%, nickel climbed 0.3% and tin nudged up nearly 0.1%, while zinc shed 0.2%, aluminium and lead lost 0.4%.