official Daily Market Analysis From Forexmart.eu

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Economic review for April 20, 2020

At the beginning of the week, mainly negative moods are observed on global exchanges: the US dollar is growing moderately, futures for the S&P 500 index are trading at a slight minus, and Asian indices are also declining.

The focus of markets remains the gradual abolition of quarantine measures in the United States and some European countries. However, this partial return to normal economic activity was announced last week, so it is unlikely that new reports of quarantine cancellation will be received with due optimism.
   
At the same time, the spread of infection in the world remains stable. Over the weekend, the increase in cases amounted to 80-85 thousand people per day. Worldwide, there are about 2.5 million cases of the disease.

Today is not rich in macroeconomic publications; only data on inflation in New Zealand and the trade balance in Japan can attract attention. The first indicator rose 0.8% in March and reach 2,5%. This country became the only one where inflation showed growth. Japan’s exports declined by 11.7% in March and trade surplus sinks by 90%. 

It should also be taken into consideration the reduction in the base rate by the People's Bank of China from 4.05% to 3.85%.

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USD/CAD. April 21, 2020 – Canadian dollar suffers losses

The fall in the oil market triggered a decline in the Canadian dollar, which is in direct correlation with Brent prices. Oil collapsed to a minimum of two decades (to the level of $18.10 per barrel) amid the collapse of global demand and a price war between Saudi Arabia and Russia.

Oil companies in Canada have already been hit hard by low oil prices, and yesterday's collapse in prices will inevitably lead to the bankruptcy of many industry players.

The current quotation of the USD/CAD pair is 1.4270. Today, you should pay attention to the data on retail sales in Canada for February. The indicator fell from 0.4% to 0.3%, better than forecast. Analysts had expected a decline to 0.2%. Tomorrow is expected to publish a consumer price index: experts predict a decline from 0.4% to -0.4%.

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Brent. April 22, 2020 – Oil shows new lows

On Wednesday, Brent oil quotes again updated the local minimum and reached $16 per barrel. However, today oil managed to recover to the level of $19.80.

Such a sharp drop was caused by fears of market participants about the extent of decline in demand for raw materials in the conditions of maximum filling of oil storage facilities. The data from the American Petroleum Institute (API) added fuel to the fire, according to which US crude oil inventories grew by 13 million barrels last week, while gasoline and distillate inventories increased by 11 million barrels in total.

Today you should pay attention to a similar report from the US Department of Energy. Experts predict an increase in reserves of 15 million barrels.

At the same time, news that the countries of the new OPEC+ deal will begin to cut production without waiting for May does not bring support to the oil market. Thus, under current conditions, a significant recovery of a commodity asset is unlikely.

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EUR/USD. April 23, 2020 – Euro broke down the level of 1.08

On Thursday, the euro declines, following yesterday's trend. The current quotation of the EUR/USD pair is 1.0780.

Today, two important events will be of interest. First, in the United States, the US House of Representatives will vote on a new fiscal package of measures to support the US economy worth $500 billion. And in Europe, an EU summit will take place, during which countries will discuss the creation of a pan-European fund that will support the economy for several years. The amount of the fund may be 1.5-2 trillion euros.

As for macroeconomic statistics, today business activity indices in the manufacturing and services sectors for April in France, Germany, the eurozone and the UK will be released. The United States will provide data on changes in the number of initial applications for unemployment benefits. Experts predict an increase in the number of applications by 4 million.

The RSI indicator is pointing down, which signals a continued decline in the European currency. However, the listed events and publications can significantly change the direction vector of the pair. So, follow the news.

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EUR/USD. April 24, 2020 – Euro in the range of 1.07-1.08

At the end of the week, the EUR/USD pair continues to decline, having reached 1.0725. The euro came under pressure after the publication of weak PMI indexes of business activity. According to recent data, the composite index in the EU fell to 13 points, which was the strongest drop in the history of observations since 1998.

Experts note that quarantine measures have a negative impact on the European services and manufacturing sector. Moreover, analysts expect European GDP to fall by 7% in 2020.

Yesterday, EU heads of state held a summit to discuss the need to create a new fund for economic recovery. However, despite the criticality of the economic situation, no decision was made on the size of the fund and the sources of its financing. The following negotiations have been postponed to May 6.

Yesterday, the US provided unemployment data, according to which the number of benefits increased by another 4.5 million people. The total number of unemployed Americans rose to 26 million. These data put pressure on the dollar today, which allowed the EUR/USD pair to recover to 1.0775.

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EUR/USD. April 27, 2020 – Euro strengthens on positive news from Europe

At the beginning of the week, the euro is showing growth, approaching 1.09. Support for the currency was provided by news that EU leaders agreed to create an emergency fund to restore the European economy with a total size of about 1.5 trillion euros.

In the US, President Donald Trump also signed into law to allocate $484 billion to accelerate the pace of economic recovery, but the news did not provide adequate support to the dollar. The fact is that the States presented data on consumer sentiment in the country: the indicator showed a decline for the third month in a row.

It is also worth noting that the United States and Europe intend to gradually lift quarantine restrictions from the beginning of May. Experts predict that economic recovery in all countries will occur extremely slowly, which does not add optimism to market participants.

Today is not rich in macroeconomic news; the EUR/USD pair will fluctuate around 1.0850. This week we should pay attention to two important events – the US Federal Reserve meeting (29.04) and the ECB (30.04).

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EUR/USD. April 28, 2020 – Euro is moderately growing to 1.09

The euro continues to grow on Tuesday, approaching 1.09. The fact is that the US dollar fell across the entire spectrum of the market after the growth of futures for US stock indices. Moreover, the appetite for risky assets increased after many countries presented plans to ease quarantine restrictions for many enterprises.

Today is not rich in macroeconomic publications. Attention may be drawn only by data on home sales in the US secondary market for March (a decrease of 9.7% is expected), as well as an indicator of consumer confidence and the Richmond Fed manufacturing index for April.

Market participants remain neutral in anticipation of tomorrow's meeting of the US Federal Reserve. And although analysts do not expect the introduction of any additional incentive measures, the regulator will have to provide relevant estimates of the economic consequences of the virus.
 

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EUR/USD. April 29, 2020 – The dollar is weakening in anticipation of the US Federal Reserve meeting

On Wednesday, the euro continues to grow moderately in anticipation of the results of the upcoming meeting of the US Federal Reserve. Most likely, the regulator will keep the rate and monetary policy at the same level, but it is worth paying attention to the press conference of the Fed head Jerome Powell. The politician must report on the future purchase of government bonds.

Yesterday's data on the index of industrial activity from the Federal Reserve Bank of Richmond put pressure on the dollar – the figure in April fell from the level of 2 points to -53. This was the strongest index drop in history. In addition, the foreign trade balance deficit in March amounted to $64.22 billion, compared with a deficit of $59.89 billion a month earlier.

Today, attention should be paid to the publication of preliminary US GDP. Analysts forecast a decrease of 4%. In the euro area will be published consumer confidence index for April. Experts expect the figure to be -22.7 points. The current quotation of the EUR/USD pair is 1.0865.

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AUDCHF today as we see here, the trend is still strong to bullish, so the best option for you is to buy it, you can start buy it when the price is going back to support area at 0.63762 with potential target up to 0.63983

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Brent. April 30, 2020 – Oil started to grow, receiving the support of several factors

On Thursday, Brent crude quotes rose to $26.60 per barrel, receiving support from data on crude oil reserves in the US from the country's Ministry of Energy. According to the recent report, stocks of raw materials in US storage facilities grew less than forecast – by only 9 million barrels. The forecast assumed an increase of 10.6 million barrels.

Additional support for oil prices was provided by a general improvement in market sentiment amidst the fact that some countries are considering mitigating the restrictions associated with coronavirus.

Experts also note that from May 1, the terms of the new OPEC+ agreement to reduce global oil production will come into force. Norway also joined the deal, saying that in June the country intends to reduce production by 250 thousand barrels per day, and in the second half of the year – by 130 million barrels.

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EUR/USD. May 1, 2020 – Euro rose to 1.0980 after the announcement of the ECB meeting results

The EUR/USD pair rose to two-week highs, reaching 1.0980. Yesterday, the results of the ECB meeting were announced, at which the regulator kept the interest rate at 0%, and the deposit rate at -0.5% per annum.

The Central Bank also announced the launch of a new program for long-term lending to eurozone banks and stated its readiness to increase the scale of the Pandemic Emergency Purchase Program (PEPP) announced in March, currently amounting to 750 billion euros. These measures supported the European currency.

The US dollar was under pressure from weak statistics. In particular, the weekly report on the number of applications for unemployment benefits recorded an increase of up to 3.839 million against a forecast of growth of up to 3.500 million. Data on expenditures and incomes of the population in March also fell below expectations: the first indicator fell by 7.5%, and the second – on 2%. Analysts had forecast values at 4.8% and 1.6%, respectively.

Today the news background is calm, in a number of European countries it is a day off. Only data on the April index of business activity in the USA can attract attention: experts expect a decrease to 36.7 points against the previous value of 49.1.

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EUR/USD. May 5, 2020 – Euro declines after weak data emerges from eurozone

On Tuesday, the European currency continues to decline, reaching 1.0840. Sentix data exerted pressure on the euro: the May consumer confidence index fell to -41.8 points against the forecast of a decline to -33.5. Moreover, the index of business activity in the manufacturing sector in Germany fell in April from 45.4 points to 34.5, while the experts' forecast suggested a fall to 34.4 points. The indicator for the entire region fell to 33.4 points against the forecast of 33.6.

Today, the German Constitutional Court will rule on the ESM incentive program and the EU fiscal pact. The approval of the program can provide some support to the euro.

Earlier the United States provided data on the volume of factory orders in March. The indicator decreased by 10.3% in monthly terms against the previous fact of a decrease of 0.1% m/m and the forecast of a decrease of 9.2% m/m.

Today, you should pay attention to statistics on the producer price index in the eurozone in March. The indicator fell from the level of -0.7% to -1.5%. The United States will present data on the trade balance for March and the index of business activity in the service sector for April.
 

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EUR/USD. May 06, 2020 – Euro broke down the level of 1.08

The euro remains under pressure amid weak demand for risky assets due to rising tensions between the US and China. At the same time, the US dollar received support from the strong macroeconomic statistics. Data on business activity in the service sector showed a decrease from 52.5 to 41.8 points. Fresh data significantly exceeded the expectations of analysts who predicted the index to fall to around 38.0.

The main event of yesterday was a statement by the German Constitutional Court, which accused the European Central Bank of exceeding its authority in the implementation of certain points of the quantitative easing program (QE).

Additional pressure on the European currency was provided by weak statistics from the eurozone: the producer price index fell to -1.5% (forecast -1.3%). And the publication of the report on retail sales showed a drop from 0.6% to -11.2%.

The current quotation of the EUR/USD pair is 1.0780. The RSI indicator on the H1 chart bounced off the support level, which signals the completion of the downward euro rally. During the day, the pair will continue to fluctuate slightly near the level of 1.0800.

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EUR/USD. May 07, 2020 – Euro continues to trade below 1.08

On Thursday, the euro continues to decline, reaching 1.0785. Pressure on the European currency was exerted by a court decision to challenge Germany’s participation in the eurozone economy stimulus program.

Additional pressure on the asset was provided by weak data from Europe. In particular, the business activity index in the eurozone services sector in April fell from 26.4 points to 12, while the forecast suggested a decrease to 11.7 points. Composite business activity index was 13.6 points against the forecast of 13.5. Moreover, the European Commission has adjusted the forecast for unemployment in the eurozone from 7.5% to 9.6% against the backdrop of the fight against coronavirus.

Moreover, weak macroeconomic data came out in the United States either, however, the «Eurobulls» were not able to take control of the situation. According to ADP, in April, a record 20.236 million Americans lost their jobs.

Today you should pay attention to the data on the change in the number of initial applications for unemployment benefits in the United States over the past week.

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EUR/USD. May 08, 2020 – Dollar weakens awaiting labor market statistics

Yesterday, trading on the euro ended with growth to the level of 1.0850. The US dollar showed some weakening, as an increase in risk appetite of investors led to a decrease in demand for safe assets.

In addition, investors are worried about the negative interest rate by the US Federal Reserve. Experts note that the yield on 2-year Treasury bonds, sensitive to the expectations of the monetary policy of the Federal Reserve, fell to a record low closing value of 0.133%.

Yesterday, macroeconomic statistics from the United States also acted as a pressure factor on the US dollar. Over the past week, another 3.169 million Americans have filed initial jobless claims. As a result, since the end of March, there have been 33.5 million such applicants.

Today we should pay attention to an important report on the labor market in the States. Analysts' forecasts are rather gloomy: employment in non-agricultural sectors is expected to decrease by 22 million jobs, and the unemployment rate may jump from 4.4% to 16%. In anticipation of these statistics, the EUR/USD pair will continue to grow above the level of 1.0850.

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Brent. May, 11 – Oil continues to decline at the beginning of the new week

At the beginning of the trading week, oil continues to decline to $30 per barrel. However, buyers are able to maintain their positions even against the backdrop of doubts about the success of the new OPEC energy pact, as well as amid the pessimistic comments by Fed representatives about the pace of economic recovery after the pandemic.

Brent remains under pressure from rising stocks and still depressed oil demand. According to data from the IEA published last week, US stocks rose 4.6 million barrels (to 532.2 million barrels). Moreover, inventory growth has been observed for the third week in a row.

Thus, the collapse of demand, coupled with the lack of available storage space for hydrocarbons, will inevitably lead to a further decrease in oil quotes.

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GBP/USD. May 12, 2020 – Sterling shows growth despite many negative factors

The GBP/USD pair began the day with growth to the area of 1.2370. The British currency is growing, despite the deteriorating market sentiment and weak English statistics. Growing demand for defensive assets amid news of repeated outbreaks of coronavirus in Asia could put pressure on the British pound and support the US dollar.

An additional negative for sterling are disappointing forecasts regarding the dynamics of the English economy. The Bank of England said that by the end of 2020, the UK economy is expected to decline by 14%, which could be the worst indicator in almost 300 years.

Tomorrow you should pay attention to the data on the country's GDP for March. The economy is expected to decline by 7%. If the forecast is confirmed, the pressure on the pound will intensify, and the pair GBP/USD will return to the area of 1.2200.

Another driver of decline is the political uncertainty in the region. By the end of the year, the country's authorities have to agree with the EU on Brexit issues. Thus, in the current environment, the pound is unlikely to have enough strength to grow.

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EUR/USD. May 13, 2020 – Euro has come under pressure from industrial production data

The euro failed to overcome the level of 1.0880 yesterday and made a decline to the level of 1.0830. Today, data on the volume of industrial production in annual terms were published in the eurozone. The rate of decline increased from -2.2% to -12.9%, which put pressure on the euro. During the day, the EUR/USD pair will continue to decline to 1.08.

Yesterday, the US provided April inflation data, according to which the consumer price index fell to 0.3%. The last time such low inflation was recorded in October 2015.

Today, attention should be paid to the speech of the head of the US Federal Reserve. It is expected that the head of the regulator will indicate the need to continue the program of quantitative easing and expand the balance of the Fed. In March, BlackRock, through which the bulk of FOMC operations go, announced that the Fed's balance sheet could be expanded to $9 trillion. Today, this figure is $6.72 trillion.

The expansion of the balance traditionally leads to a weakening dollar, since an increase in the money supply leads to a depreciation of the national currency.

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EUR/USD. May 14, 2020 – Euro declines after J. Powell speech

On Thursday, the euro declines, continuing the dynamics of yesterday. The current quotation of the EUR/USD pair is 1.0775. Pressure was exerted by the speech of the head of the US Federal Reserve Jerome Powell. He noted that economic forecasts for the US are «extremely uncertain and subject to significant negative risks.» At the same time, the possibility of negative interest rates is not yet considered by the regulator.

Market participants reacted to Powell's performance with sales of risky assets.

Also, the tense situation between the US and China remains the focus of markets. The United States continues to accuse the PRC of spreading the coronavirus, while Beijing, in turn, is considering the possibility of retaliatory steps (in the case of the imposition of sanctions by America).

Today, attention should be paid to data on changes in the number of initial applications for unemployment benefits in the United States. Experts predict a decline to 2.500K.

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EUR/USD. May 15, 2020 – Euro is stable at 1.08

The pair EUR/USD remains stable near the level of 1.08 at the end of the week, being influenced by multidirectional factors. On the one hand, American statistics are mixed, which puts pressure on the dollar. And on the other hand, the indicators of Europe are also not encouraging, and the region remains in quarantine.

Today it is worth paying attention to a whole block of interesting macroeconomic statistics. The eurozone presented its second estimate of GDP for the first quarter: the economy contracted at 3.8%. In annual terms, the region’s GDP decreased by 3.2%.

In the evening, the US will publish retail sales data for April – analysts expect a strong drop in the indicator (by 12.0% on a monthly basis). In March, the indicator fell by 8.7% m/m. The volume of industrial production in April will also arouse the interest of traders: the indicator may decline by 11.3 m/m.

Pending this data, the pair will continue to fluctuate near the level of 1.08.