EUR/USD Forecast April 27-May 1 – Investors Brace for Sharp Drops in GDP, Retail Sales

There was some positive news from Germany’s ZEW Economic Sentiment, which defied expectations and soared to 28.2, up from -49.5 points. The forecast stood at -40.0 points. The all-eurozone indicator showed a similar jump, climbing from -49.5 to 25.2. The estimate was -38.2 points. However, eurozone consumer confidence fell to -23, down from -12 points. PMI releases fell sharply in March, reflecting the lockdown of much of the economies of Germany and the eurozone due to Covid-19. German Manufacturing PMI fell to 34.4 and the all-eurozone PMI slowed to 33.6 points. The services sector looked event worse, as German Services PMI fell to 15.9 and the eurozone PMI slowed to 11.7, pointing to sharp contraction. Finally, German Ifo Business Climate slowed for a third successive month, falling to 74.3 points. This missed the forecast of 79.8 points.

In the U.S., unemployment claims continue to reflect the extent of the economic turmoil caused by Covid-19. Jobless claims dropped to 4.4 million, down from 5.5 million a week earlier. In the past five weeks, new claims have totaled a staggering 26 million, as the Covid-19 crisis has shut down much of the U.S. economy. There was more bad news from March durable goods orders, which plunged by 14.4%, its first decline in four months. The core reading declined by 0.2%, after a decline of 0.6%. The  UoM Consumer Sentiment slumped to 71.8, down sharply from 89.1 a month earlier. Still, this beat the estimate of 67.8 points.