World Bank Warns Of Severe Economic Pain In Asia-Pacific Due To Covid-19

Trading 31 mar 2020 Commentaire »

Developing economies in East Asia and the Pacific are facing the prospect of a global financial shock and recession and more people are set to remain poor, thanks to the coronavirus, or Covid-19, outbreak, the World Bank said in a report late Monday. "Significant economic pain seems unavoidable in all countries," the World Bank said in a report titled East Asia and Pacific in the Time of Covid-19.

The lender urged countries to take action now - including urgent investments in healthcare capacity and targeted fiscal measures such as subsidies for sick pay and healthcare - to mitigate some of the immediate impacts. The report also stressed that government should ensure temporary deprivation does not translate into long-term losses of human capital. In a baseline scenario, growth in the EAP region is projected to slow to 2.1 percent this year from an estimated 5.8 percent in 2019, the report said. In a lower case scenario, the growth is forecast to plummet to a negative 0.5 percent. In China, growth is projected to slow to 2.3 percent in the baseline and to 0.1 percent in the lower case scenario this year from 6.1 percent in 2019. "Containment of the pandemic would allow for a sustained recovery in the region, although risks to the outlook from financial market stress would remain high," the lender said in the report that is part of its April 2020 Economic Update for East Asia and the Pacific. The World Bank sees a serious impact on poverty from the virus shock and expects nearly 24 million fewer people to escape poverty across the region this year, in the baseline scenario, than would have in the absence of the pandemic. The poverty line used for the projection is US$5.50 a day. In the worst case scenario, poverty is estimated to increase by about 11 million people. Previous projections estimated that nearly 35 million people would be out of poverty in the region this year that included over 25 million in China. "The good news is that the region has strengths it can tap, but countries will have to act fast and at a scale not previously imagined," Victoria Kwakwa, vice president for East Asia and the Pacific at the World Bank, said. The World Bank also urged that trade policy should remain open to ensure that medical and other supplies are available to all countries, as well as to facilitate the region's rapid economic recovery.

The lender also recommended easing credit, but with regulatory oversight, to help households smooth their consumption and help firms survive the immediate shock. Debt relief will be essential for poorer countries so that critical resources can be focused on managing the economic and health impacts of the pandemic, the report said.

Further, it warned of the substantially higher risk of falling into poverty among households dependent on sectors such tourism in Thailand and the Pacific Islands, manufacturing in Cambodia and Vietnam that are particularly vulnerable to COVID-19 impact. Households dependent on informal labor in all countries are also exposed to the virus shock, the report added. The World Bank Group has announced a US$14 billion fast-track package to boost the Covid-19 response in developing countries and shorten the time to recovery. The projections are based on the country-level data available as of March 27.


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U.S. Consumer Confidence Deteriorates Amid Uncertainty About Outlook

Trading 31 mar 2020 Commentaire »

Reflecting a deterioration in the short-term outlook, the Conference Board released a report on Tuesday showing a notable decrease in U.S. consumer confidence in the month of March.

The Conference Board said its consumer confidence index slumped to 120.0 in March from an upwardly revised 132.6 in February.

Economists had expected the consumer confidence index to tumble to 110.0 from the 130.7 originally reported for the previous month.

The report said the present situation index dipped to 167.7 in March from 169.3 in February, reflecting a modestly less favorable assessment of current conditions.

The percentage of consumers claiming business conditions are "good" was relatively unchanged at 39.6 percent, while those claiming business conditions are "bad" inched up to 11.4 percent from 10.8 percent.

Consumers' assessment of the job market also moderated, with those saying jobs are "plentiful" slipping to 44.9 percent from 46.5 percent and those claiming jobs are "hard to get" unchanged at 13.9 percent.

Meanwhile, the report said the expectations index plummeted to 88.2 in March from 108.1 in February, as consumers were significantly less optimistic about the short-term outlook.

Consumers expecting business conditions will improve over the next six months fell to 18.2 percent from 20.6 percent, while those expecting business conditions will worsen jumped to 14.9 percent from 7.2 percent.

The outlook for the labor market was also less positive, with consumers expecting more jobs edging down to 15.5 percent from 16.6 percent and those anticipating fewer jobs climbing to 17.1 percent from 12.0 percent.

Lynn Franco, Senior Director of Economic Indicators at the Conference Board, noted the present situation index remained relatively strong, reflective of an economy that was on solid footing prior to the coronavirus outbreak.

"However, the intensification of COVID-19 and extreme volatility in the financial markets have increased uncertainty about the outlook for the economy and jobs," Franco said.

She added, "March's decline in confidence is more in line with a severe contraction - rather than a temporary shock - and further declines are sure to follow."

Last Friday, the University of Michigan released a separate report showing consumer sentiment in the U.S. deteriorated by much more than initially estimated in the month of March.

The report said the consumer sentiment index for March was downwardly revised to 89.1 from the preliminary reading of 95.9.

The consumer sentiment index is now down sharply from the final February reading of 101.0, reflecting the fourth largest one-month decline in nearly a half-century.


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UK Grocery Sales Grow At Record Pace In March: Kantar

Trading 31 mar 2020 Commentaire »

UK grocery sales grew at a record rate in March as Britons prepared for a long stay at home as the country tries to slow the spread of the coronavirus, or Covid-19, pandemic.

Supermarket sales grew 7.6 percent year-on-year in the past 12 weeks, which was the fastest growth in over a decade, latest grocery market share figures from Kantar showed Tuesday. Over the most recent four weeks, the sales growth was nearly three times higher at 20.6 percent, making March the biggest month of grocery sales ever recorded, the firm said. The recent survey found that Britons rushed to shops in unusually high numbers on March 16 and 88 percent of households visited a grocer, making an average five trips, between March 16 and 19. That added up to 42 million extra shopping trips across the four days. Online grocery sales climbed 13 percent year-on-year. "It has been an extraordinary month and social distancing measures have had a profound impact on all our daily lives - from the way we work and socialise, to how we shop and care for our loved ones," Fraser McKevitt, head of retail and consumer insight at Kantar said. "Retailers and their staff have been on the frontline as households prepare for an extended stay at home, with grocery sales amounting to ?10.8 billion during the past four weeks alone - that's even higher than levels seen at Christmas, the busiest time of year under normal circumstances."

Among the main retailers, Lidl reported sales growth of 17.6 percent in the 12 weeks that boosted its market share to 6.1 percent. Aldi's market share hit a record high 8.2 percent with 11 percent sales growth. Sainsbury's sales growth was the fastest, at 7.4 percent, among the big four. Growth at Tesco, Asda and Morrisons were 5.5 percent, 4.9 percent and 4.6 percent, respectively. Iceland logged 11.7 percent sales growth and its market share grew to 2.2 percent. Convenience store chare Co-op reported growth of 9.4 percent and Waitrose witnessed 7.5 percent increase, the fastest since November 2013. Online store Ocado boosted sales by 12.5 percent and added 133,000 new customers.


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Chicago Business Barometer Dips Much Less Than Expected In March

Trading 31 mar 2020 Commentaire »

A report released by MNI Indicators on Tuesday showed a continued contraction in Chicago-area business activity in the month of March.

MNI Indicators said its Chicago business barometer fell to 47.8 in March from 49.0 in February, with a reading below 50 indicating a contraction in regional business activity.

The Chicago business barometer remained below 50 for the ninth straight month but showed a relatively modest decrease compared to economist estimates for a slump to 40.0.

The modest decrease by the business barometer came as the production index returned to contraction territory after February's rise above the 50-mark and demand for new orders plunged by 7.9 percent.

MNI Indicators said some firms reported a rise in orders due to stockpiling by U.S. customers, while others noted a fall in new business due to the coronavirus pandemic.

The report showed a modest increase by the employment index, although the reading below 50 still indicates a loss of jobs.

Meanwhile, MNI Indicators said prices at the factory gate hit their highest level since last December, with the index surging up by 7.2 percent.

The Institute for Supply Management is scheduled to release a separate report on national manufacturing activity in the month of March on Wednesday.

The purchasing managers index is expected to drop to 45.0 in March from 50.1 in February, with a reading below 50 indicating a contraction in manufacturing activity.


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Dollar Little Changed Following Consumer Confidence Index

Trading 31 mar 2020 Commentaire »

U.S. consumer confidence report for March has been released at 10.00 am ET Tuesday.

After the data, the greenback changed little against its major rivals.

The greenback was trading at 108.21 against the yen, 0.9650 against the franc, 1.2407 against the pound and 1.0951 against the euro around 10:05 am ET.


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*U.S. Consumer Confidence Index Drops To 120.0 In March

Trading 31 mar 2020 Commentaire »

U.S. Consumer Confidence Index Drops To 120.0 In March


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Dollar Mixed Ahead Of Consumer Confidence Index

Trading 31 mar 2020 Commentaire »

U.S. consumer confidence report for March is expected at 10.00 am ET Tuesday. The consensus is for 110.00, while it was up 130.7 in the previous month.

Ahead of the data, the greenback traded mixed against its major rivals. While the greenback dropped against the pound and the yen, it held steady against the euro and the franc.

The greenback was worth 108.22 against the yen, 0.9640 against the franc, 1.2416 against the pound and 1.0967 against the euro as of 9:55 am ET.


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*Chicago Business Barometer Dips To 47.8 In March

Trading 31 mar 2020 Commentaire »

Chicago Business Barometer Dips To 47.8 In March


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Short-term technical analysis of EURUSD

Trading 31 mar 2020 Commentaire »

Short-term support fails to hold in EURUSD and price action shows how vulnerable this pair is. The recent bounce from 1.0635 was most probably a relief bounce and price is making a reversal off the major Fibonacci retracement we mentioned in previous posts.

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Although the new higher high with a new bearish RSI divergence did not come, EURUSD broke below short-term support at 1.0990. In Ichimoku cloud terms nothing is lost. On the contrary it is textbook price behavior to see price back test cloud support after breaking above the cloud. Bulls remain in control as long as price is above the cloud. Breaking below 1.0930 would confirm the important top at 1.1145 and will increase the chances of a move towards 1.06-1.07. Short-term support is at 1.0965. Failure to hold this level would be another bearish sign. I will turn bearish if we break below 1.0965.

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Gold price turns lower

Trading 31 mar 2020 Commentaire »

Gold price is trading below $1,590 and price is approaching our first short-term target of $1,570. Price has reversed as initially expected. The new higher high scenario with another bearish divergence did not come as price broke below short-term support.

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Gold price is following our latest analysis. Gold price closed below the kijun-sen and gave us another bearish signal. Price is heading towards the Kumo (cloud). This bearish reversal is unfolding now. If the entire upward move from $1,450 was just a relief rally, then a major top is in at $1,644 and we should not see price break above the short-term resistance at $1,632.

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Green rectangle - major support

Yellow line - target area if price breaks below green rectangle

Red lines - bullish channel

Pink line - RSI resistance

Gold price is reversing below the 61.8% Fibonacci retracement. Again this Fibonacci area has proved an important turning point. Gold price is expected to move lower as we explained in previous posts towards $1,570 at least. Our second target is at $1,530. Breaking below $1,530 will increase the chances of moving below the green support area and approaching the yellow rectangle area.

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