Macro Roundup (Jun 17)

SHANGHAI, Jun 17 (SMM) – This is a roundup of global macroeconomic news last night and what is expected in the day ahead.

The US dollar rose on Tuesday on the back of a record rise in US retail sales and optimism over a coronavirus drug, which reinforced a growing belief that the worst may be over for the world’s largest economy.

Federal Reserve Chair Jerome Powell, however, painted a rather bleak picture of the economy as he said there is significant uncertainty about the timing and strength of the US recovery. His comments bolstered the greenback’s safe-haven appeal.

The European Commission (EC), the European Union's executive body, intends to unveil its own plans for the development of a coronavirus vaccine, with an emergency funding up to €2.7 billion.
The funds would target drugs entering clinical trials this year, to ensure that the EU's 500 million citizens would benefit from their mass production by next year.

Overnight, LME and SHFE base metals mostly closed higher on the day, with LME lead leading the gains with a rise of 1.69%. LME copper edged up 0.05%, aluminium added 1.04%, nickel climbed 1.6%, while zinc slipped 0.02% and tin lost 0.03%. 

SHFE zinc advanced 0.33%, lead rose 0.53%, nickel grew 0.97%, tin increased 1.05%, while copper shed 0.17%. Rebar dropped 0.31% and stainless steel inched down 0.08%. 

On the data front, the US retail sales jumped 17.7% in May, the biggest rise since the government started tracking the series in 1992, as businesses have increasingly reopened amid the coronavirus crisis. The reading recovered from record-setting plunges of 8.3% in March and 14.7% in April. 

"There are signs from the data here of better traction for the U.S. economy," said Shaun Osborne, chief FX strategist at Scotiabank in Toronto. "Perhaps we can move way from the binary risk-off and risk-on move of the market and just focus on fundamentals."

Germany ZEW economic sentiment rose further to 53.4 in June, up from 51 in May, beating expectation of 60, according to data published by the Leibniz Centre for European Economic Research (ZEW) on Tuesday. That’s the third consecutive month of increase.

“There is growing confidence that the economy will bottom out by summer 2020. This is reflected in the renewed rise of the ZEW Indicator of Economic Sentiment as well as the more optimistic assessment of the current situation. The expected earnings for the individual sectors in Germany still vary greatly. Earnings expectations are strongly negative for export-oriented sectors such as automotive and mechanical engineering, as well as the financial sector,” commented by ZEW President Achim Wambach.

“In contrast, forecasts are fairly positive for information technologies, telecommunications and consumer-oriented services. The financial market experts continue to expect only a slow increase in economic value added in the third and fourth quarters.” 

Key economic data slated for release today include the US housing starts and building permits for May, the weekly crude oil change surveyed by the Energy Information Administration (EIA) and the eurozone CPI for May.