Abysmal PMI figures highlight economic pain of the coronavirus crisis

The release of April’s preliminary PMI figures hung over currency markets yesterday as record drops in activity stoked concerns over the economic damage of the coronavirus pandemic.

The pound remains mostly flat, with GBP/EUR muted at €1.1457 and GBP/USD subdued at $1.2322. GBP/CAD is stable at C$1.7363, while GBP/AUD and GBP/NZD hold steady at AU$1.9407 and NZ$2.0574 respectively.

In the spotlight today we have the UK’s latest retail sales figures and US durable goods orders, both of which are expected to have fallen sharply last month as a result of the coronavirus crisis. 

What’s been happening?

The euro tumbled yesterday as April’s preliminary PMIs revealed the Eurozone economy was brought to its knees this month as the coronavirus crisis destroyed economic activity.

Further weighing on the single currency was the failure of EU members to agree upon a comprehensive coronavirus recovery package following yesterday’s summit of leaders.

While the pound edged higher again on Thursday, its gains were tempered by the publication of the UK’s own PMI release.

The UK figures also revealed a much deeper slump in business activity than forecast, with analysts speculating that they indicate a drop of at least 7% of GDP in the second quarter.

Meanwhile, the US private sector fared a little better than the UK and Eurozone’s last month, with a composite reading in the high 20s.

However, this was not enough to cushion data showing another massive increase in jobless claims last week, which ultimately left the US dollar slightly down on the day.

What’s coming up?

Looking ahead to today’s session there will be plenty more data to highlight the toll the coronavirus crisis is taking on the global economy.

Today’s releases were kicked off by the UK’s latest retail sales figures earlier this morning. Sales growth suffered a record contraction in March, which may cap any additional upside in the pound.

Also in focus this morning will be Germany’s business climate figures. Will a further deterioration in business sentiment place additional pressure on the euro?

Closing out this week’s session will be the latest US durable goods figures, where an expected collapse in orders is likely to dent the appeal of the US dollar.