UK Chancellor Unveils GBP 30 Bln Stimulus For Economy Amid Covid-19 Outbreak

Trading 11 mar 2020 Commentaire »

Chancellor Rishi Sunak unveiled a comprehensive stimulus package totaling GBP 30 billion [$39 billion] on Wednesday to support the UK economy as the coronavirus, or Covid-19, keeps spreading hurting people and businesses.

The chancellor also presented the latest round of forecasts from the Office for Budget Responsibility that showed that the UK economy is set to grow at the slowest pace in more than a decade this year.

The slews of measures announced in the budget included a relaxation of sick pay rules, tax relief and cash grants for stressed smaller businesses, and a GBP 5 billion funding boosts for the NHS to fight the virus outbreak. Hours before the budget, the Bank of England came out with its monetary stimulus for the economy that included a 50 basis point cut to the bank rate to a record low 0.25 percent and a new funding scheme for small and medium enterprises.

Bank of England Governor Mark Carney said the bank is coordinating its actions with the Chancellor on the budget day, in order to ensure that measures have "maximum impact". Sunak, who became the chancellor just last month, called the budget as one that "provides security today" and a "a plan for prosperity tomorrow". "I will do whatever it takes to support the economy," Sunak said. "There is likely to be a temporary disruption to our economy," he added. " I'm confident that our economic performance will recover," he said.

Without fully considering the impact of the virus outbreak, GDP would grow 1.1 percent in 2020 and 1.8 percent in 2021, the chancellor said. Growth is then seen easing to 1.5 percent in 2022.

The growth projected for this year is the weakest since 2009. Growth over the next two years will be 0.5 percentage points higher than it would have been due to the measures announced in the stimulus, Sunak said.

The OBR forecast inflation at 1.4 percent this year, 1.8 percent next year and around the 2 percent target for the rest of the forecasting period. The chancellor extended the statutory sick pay to all those who are advised to self-isolate, even if they have not yet presented with symptoms.

For the self-employed or for those in the gig economy, the chancellor said they can claim allowance from day 1 instead of day 8. The budget also created a GBP 500 million Hardship Fund for local authorities to help the distressed people. Sunak announced a temporary Coronavirus Business Interruption Loan Scheme in which banks will offer loans of up to GBP 1.2 million to support small and medium sized businesses.

Further, losses of up to 80 percent on those loans will be guaranteed by the government without any fees.

The business rates for shops, cinemas, restaurants, and music venues were abolished for this coming fiscal year. The business rate waiver was extended to more establishments in the leisure and hospitality sector such as museums, art galleries and sports clubs, as the Covid-19 outbreak is set to have a significant impact on these.

The chancellor also announced a GBP 3,000 cash grant each to the 700,000 smallest businesses in the country. Sunak said the government will undertake an additional fiscal loosening of GBP 18 billion to support the economy this year.


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Iceland Cuts Rate To Record Low To Support Economy From Covid-19 Impact

Trading 11 mar 2020 Commentaire »

Iceland's central bank slashed its key interest rate and lowered the reserve requirement for banks in a surprise move on Wednesday as the economic outlook deteriorates amid the coronavirus, or Covid-19, outbreak.

The Monetary Policy Committee decided to cut the key interest rate, which is the seven-day term deposit rate, by 50 basis points to 2.25 percent, the Central Bank of Iceland said in a statement. The previous change in the rate was a 25 basis point cut in February. Policymakers also decided to lower the average reserve requirement for banks to zero from 1 percent. The fixed reserve requirement was maintained at 1 percent.

"With these actions, the Bank is easing the monetary stance in view of the worsening economic outlook following the accelerated spread of the COVID-19 virus," the central bank said. "The MPC will continue to monitor economic developments and will use the tools at its disposal to support the domestic economy."

The central bank hopes that the reduction in the average reserve requirement and changes in the treatment of the fixed reserve requirement in liquidity rules will ease the banks' liquidity position and give them greater scope to respond to changed conditions in the domestic economy. The rate cut follows the government's stimulus package announcement on Tuesday to reduce the impact of the Covid-19 on the tourism-dependent economy.

Stimulus measures include extending tax deadlines for stressed businesses, temporary tax relief for the tourism industry, tax cuts and incentives to boost private consumption and demand, accelerating infrastructure projects and measures to increase banks ability to provide credit to businesses and households. The government also said it will revise and delay its five-year fiscal strategy plan and that a special investment effort was under way that will significantly increase investment spending. This will be financed by selling the state-owned Islandsbanki in part or in full, the government statement said.


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*U.S. Crude Oil Inventories Jump By 7.7 Million Barrels In Week Ended 3/6

Trading 11 mar 2020 Commentaire »

U.S. Crude Oil Inventories Jump By 7.7 Million Barrels In Week Ended 3/6


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Dollar Mixed After U.S. Consumer Inflation Data

Trading 11 mar 2020 Commentaire »

The U.S. dollar showed mixed trading against its major rivals in the European session on Wednesday, following the release of a data showing modest increase in the nation's consumer prices in the month of February.

The Labor Department said its consumer price index inched up by 0.1 percent in February, matching the uptick seen in January. Economists had expected prices to come in unchanged.

Consumer prices edged higher as higher prices for food and shelter more than offset a steep drop in energy prices.

Core consumer prices, which exclude food and energy prices, rose by 0.2 percent for the second consecutive month. The increase in core prices matched economist estimates.

President Donald Trump on Tuesday failed to provide any concrete details about a proposed U.S. stimulus plan.

Traders seem to be expressing continued uncertainty about whether expected stimulus measures will be adequate to soften the economic blow from the outbreak.

The greenback dropped in the previous session, as Trump's stimulus plans underwhelmed expectations.

The greenback fell back to 0.9326 against the franc, compared to yesterday's closing value of 0.9400. The greenback is seen finding support around the 0.92 mark.

The greenback was trading at 1.1340 against the euro, down from yesterday's closing quote of 1.1280. If the greenback falls further, it is likely to test support around the 1.15 region.

The greenback held steady against the pound, after having retreated from a 1-week high of 1.2830 seen at 3:00 am ET. The pair had finished Tuesday's deals at 1.2903.

Data from the Office for National Statistics showed that the UK economy stagnated in January as the expansion in the service sector was offset by falling industrial and construction output.

Gross domestic product remained flat on month in January after expanding 0.3 percent in December. Economists had forecast a monthly growth of 0.2 percent.

The greenback remained lower against the yen at 104.60. The greenback is poised to challenge support around the 102.00 mark.

The U.S. monthly budget statement for February is scheduled for release in the New York session.


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Ichimoku cloud indicator Daily analysis of Gold

Trading 11 mar 2020 Commentaire »

Gold price is under pressure again today trading in lower levels since yesterday. Despite the bounce towards $1,670, price is now trading again at $1,638 under pressure. Short-term trend remains bullish despite the pull back.

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Gold price is trading both above the cloud and above both the tenkan- and kijun-sen indicators. Support is at $1,632-25 and the tenkan-sen (Red line indicator) is above the kijun-sen. If price breaks and closes below $1,625 then we will have our first weak sell signal. Next major support is at the Kumo at $1,570.The material has been provided by InstaForex Company - www.instaforex.com

Ichimoku cloud indicator short-term analysis of EURUSD for March 11, 2020

Trading 11 mar 2020 Commentaire »

EURUSD is pulling back as we expected by our latest analysis. According to the Ichimoku cloud indicator we have a weak sell signal as price is breaking below short-term indicators. The pull back could unfold all the way to 1.1130.

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EURUSD is still trading above the Kumo in the short-term chart, but price has broken below both the tenkan-sen (red line indicator) and the kijun-sen (green line indicator). The tenkan-sen has also crossed below the kijun-sen and thus we have our first weakness signal. Support is found at the cloud, around 1.1130. Resistance is found at 1.1330-1.1350. Breaking above this level will increase the chances of price reaching new 2020 highs.The material has been provided by InstaForex Company - www.instaforex.com

*UK Budget: Introduces Plastic Packaging Tax

Trading 11 mar 2020 Commentaire »

UK Budget: Introduces Plastic Packaging Tax


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March 11, 2020 : GBP/USD Intraday technical analysis and trade recommendations.

Trading 11 mar 2020 Commentaire »

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In the period between December 18th - 23rd, bearish breakout below the depicted previous bullish channel followed by quick bearish decline below 1.3000 were demonstrated on the H4 chart.

However, Immediate bullish recovery (around 1.2900) brought the pair back towards 1.3250 (backside of the broken channel) where the current wide-ranged movement channel was established below 1.3200.

Since January 13, progressive bearish pressure has been built over the price zone of 1.2980-1.3000 until February 5.

On February 6, bearish breakdown below 1.2980 enhanced further bearish decline towards 1.2890 (the lower limit of the movement channel) where two episodes of bullish rejection were manifested on February 10th and 20th.

Shortly after, the lower limit of the channel around 1.2850 has failed to provide enough bullish Support for the GBPUSD pair.

That's why, further bearish decline was expressed towards the nearest DEMAND level around 1.2780 where significant bullish rejection and an inverted Head & Shoulders reversal pattern was demonstrated in the period between Feb. 28 - March 4 especially after The Fed unexpectedly cut rates by half-point for the first time since 2008 to protect against an anticipated slowdown of US economy for the fear of a possible Corona Virus outbreak.

Hence, a quick bullish movement was demonstrated towards the price zone of 1.2980-1.3000 which has temporarily failed to offer enough bearish pressure on the GBPUSD pair.

Further bullish advancement was demonstrated towards 1.3200 where significant bearish pressure brought the pair back below 1.3000 via quick bearish engulfing H4 candlesticks.

The pair remains trapped between 1.2830 (the lower limit of the current movement channel) and 1.3000 (Prominent Key-Zone) until breakout occurs in either directions.

Based on the recent aggressive bullish price action around the lower limit of the current channel near 1.2830, a possible bullish breakout above 1.3000 is more probable to be expected. If so, another bullish visit towards 1.3110 would he expected.

On the other hand, bearish persistence below 1.2980 enhances the bearish side of the market again towards 1.2870 then 1.2830.

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U.S. Consumer Prices Unexpectedly Edge Higher In February

Trading 11 mar 2020 Commentaire »

A report released by the Labor Department on Wednesday showed a modest increase in U.S. consumer prices in the month of February.

The Labor Department said its consumer price index inched up by 0.1 percent in February, matching the uptick seen in January. Economists had expected prices to come in unchanged.

Consumer prices edged higher as higher prices for food and shelter more than offset a steep drop in energy prices.

The report said food prices climbed by 0.4 percent in February after edging up by 0.2 percent in January, with prices for food at home showing the largest monthly increase since May of 2014.

The shelter index also rose by 0.3 percent in February following a 0.4 percent increase in the previous month.

Meanwhile, energy prices plunged by 2.0 percent in February after falling by 0.7 percent in January, as all of the major energy component indexes declined

The Labor Department said core consumer prices, which exclude food and energy prices, rose by 0.2 percent for the second consecutive month. The increase in core prices matched economist estimates.

Along with the index for shelter, the indexes for apparel, personal care, used cars and trucks, education, and medical care all increased during the month, while the indexes for recreation and airline fares fell.

Compared to the same month a year ago, consumer prices were up by 2.3 percent in February, reflecting a slowdown from the 2.5 percent jump in January.

On the other hand, the report said the annual rate of growth in consumer prices edged up to 2.4 percent in February from 2.3 percent in the previous month.

"The drop back in CPI inflation to 2.3% in February, from 2.5%, is a sign of things to come, with the plunge in crude oil prices likely to drag headline CPI inflation below 1.0% in the coming months," said Michael Pearce, Senior U.S. Economist at Capital Economics.

He added, "With underlying price pressures remaining contained, there is nothing in the incoming inflation data to stop the Fed from lowering rates to near-zero in the coming weeks and keeping them there for an extended period."

The Labor Department is scheduled to release a separate report on Thursday on producer price inflation in the month of February.

Producer prices are expected to edge down by 0.1 percent in February after climbing by 0.5 percent in January, while core prices are expected to inch up by 0.1 percent after rising by 0.5 percent.


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*UK Budget: 700K Smallest Business To Get GBP 3K Cash Grant

Trading 11 mar 2020 Commentaire »

UK Budget: 700K Smallest Business To Get GBP 3K Cash Grant


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