EUR/USD and GBP/USD. Results of May 4. Conflict between the US and China will escalate after the end of the epidemic, and

Trading 04 mai 2020 Commentaire »

4-hour timeframe

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Average volatility over the past five days: 84p (high).

The EUR/USD pair was trading as it should be on Monday. As we expected in previous articles (published over the weekend), a downward correction began immediately after trade opened, which was justified by technical factors, and simply by the banal need to correct after a fairly strong growth of the euro/dollar pair. The technical factor is quite strong - working out the 1.0990 level, which is the previous high, as well as working out the psychological mark of 1.1000. Traders failed to overcome these two barriers, so a rebound and corrective movement followed. In fairness, it should be noted that there were no heavy arguments in favor of continuing the upward movement. We are more and more inclined towards the option of consolidating the pair in a wide side channel (250 points) with an upper border of about 1.1000 and a lower border of about 1.0750. At least, the recent weeks' movements are in this range. Moreover, the participants calmed down after a month of panic in the foreign exchange market, and now they need new reasons for trading in one direction or another. Considering the fact that all macroeconomic statistics and the fundamental background are ignored, then it means that technical factors are left, which just speak in favor of the movement in a wide side channel.

Several reports unimportant in the current realities of the market were published in the European Union and the United States on Monday. Business activity indices in manufacturing sectors have become known in Europe today. The values are as follows: in Spain - 30.8, in Italy - 31.1, in Germany - 34.5, in France - 31.5, in general in the European Union - 33.4. Thus, all countries in terms of business activity in production are approximately at the same level. The values themselves did not impress traders at all, since it was already clear that they would collapse. However, compared to services, things are not very bad. In any case, a correction by the time this data is published has already begun and would continue in any case. So these reports had no effect. A report on production orders for March was published in the United States, which showed a decrease of 10.3% with a forecast of -9.7%. Considering the fact that both the euro and the pound continued to calm down after this publication, there is reason to believe that this report did not have any effect on the mood of traders.

Traders in the current environment are much more interested in the question of what will happen after the epidemic can be overcome. Of course, this is still a long way off. There is no vaccine, but even when it is invented, it will take months to first produce it in the right quantities, and then to vaccinate the entire population of the planet. And we are also talking about poor African countries. Therefore, the end of the crisis and the epidemic in the near future should definitely not be expected. The best that the world can expect in the coming year is life in soft quarantine. However, most of us are still optimistic about the future, and therefore are interested in this issue. And the prospects for a world order after the end of the epidemic are very hopeless. Many developed countries of the world are already making claims to China regarding the spread of coronavirus. Suspicions that the COVID-2019 virus did not accidentally break free, and the Chinese government deliberately did not inform the whole world about the extent of the pandemic on its territory and the high threat of spread. The leaders of France and Germany have already spoken out. Well, about Donald Trump, who, thanks to China and its "gift", the chances of a re-election in November have significantly decreased, and there is nothing to say. The US president was determined to "get what he owed" from China. Now there is evidence that China deliberately hid important information about the virus, and also in every possible way delayed its publication in order to manage to purchase the necessary amount of medicines and medical remedies. According to Trump, these delays have led to the infection of the whole world. Trump also accuses China of not preventing the spread of the virus throughout the planet, as well as the World Health Organization that gave incorrect advice and generally failed the entire fight against the pandemic. "In my opinion, they (China) made a mistake and tried to hide it. They could not put out the fire on time. They stopped people who were traveling to China, but did not stop people who were traveling from China around the world," the US president said. As a result, Trump is seriously thinking about starting a new trade war with China.

However, at the same time, China won't sit back and actually provokes the United States to answer its questions regarding the pandemic. In particular, through its print media, Beijing asks questions to Washington. For example: back in November 2019, U.S. intelligence officers informed the Pentagon and the White House that a new disease was spreading in the Chinese province of Wuhan. Later, the National Medical Information Center compiled a report describing the virus. Trump, according to reliable information, received reports on the virus for two months, but imposed a state of emergency only March 13. Why?

4-hour timeframe

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Average volatility over the past five days: 128p (high).

The GBP/USD pair also continued to adjust on May 4, as we predicted during the weekend. A new signal for selling the Dead Cross from Ichimoku has formed today, so the trend for the pair has already changed downward. is approaching the Senkou Span B line, which lies very close to the volatility level of 1.2365 and the first support level of 1.2354. Thus, these three supports in total can become an insurmountable obstacle to a downward track. As for the macroeconomic background, there has not been a single important publication today in the UK. Therefore, even if traders had paid attention to the foundation now, nothing would have prevented the pound sterling from falling. As in the case of the euro, we believe that the GBP/USD pair may now begin to consolidate in a wide side channel (400 points). In addition, traders perfectly worked out the previous local high (about 1.2647) and rebounded off of it. Therefore, we also have the double top pattern at our disposal now.

Recommendations for EUR/USD:

For short positions:

The EUR/USD pair started a corrective movement and could go below the critical Kijun-sen line after the pound on the 4-hour timeframe. Thus, you can consider selling the euro after consolidating the first goals of the support level of 1.0854 and the Senkou Span B line, but in small lots, so the Dead Cross is still weak.

For long positions:

Long positions will be relevant with the target resistance level of 1.1063 if there is a rebound from the Kijun-sen line.

Recommendations for GBP/USD:

For short positions:

The pound dollar continues to move down. Thus, traders are advised to sell the British currency with the goals of the Senkou Span B line and the level of 1.2354, but in small lots, since the Dead Cross is still weak.

For long positions:

Purchases of the GBP/USD pair will again become relevant with the goal of 1.2621 not before consolidating the price back above the critical line.

Explanation of illustrations:

Ichimoku indicator:

Tenkan-sen is the red line.

Kijun-sen is the blue line.

Senkou Span A - light brown dotted line.

Senkou Span B - light purple dashed line.

Chikou Span - green line.

Bollinger Bands Indicator - 3 yellow lines.

The MACD indicator is a red line and a histogram with white bars in the indicators window.

Classic support / resistance levels - red and gray dashed lines with price symbols.

Pivot level is a yellow solid line.

Volatility levels are red solid lines.

Possible price movements:

Red and green arrows.

The material has been provided by InstaForex Company - www.instaforex.com

U.S. Factory Orders Show Steep Nosedive In March

Trading 04 mai 2020 Commentaire »

New orders for U.S. manufactured goods nosedived by even more than expected in the month of March, according to a report released by the Commerce Department on Monday.

The report said factory orders plummeted by 10.3 percent in March after edging down by a revised 0.1 percent in February.

Economists had expected factory orders to plunge by 9.8 percent compared to the unchanged reading originally reported for the previous month.

The steeper than expected drop in factory orders reflected substantial decreases in orders for both durable and non-durable goods.

Orders for durable goods sank by 14.7 percent, led by a 41.3 percent nosedive in orders for transportation equipment, while orders for non-durable goods tumbled by 5.8 percent.

The Commerce Department said shipments of manufactured goods also slumped by 5.2 percent in March after dipping by 0.3 percent in February.

Inventories of manufactured goods also fell by 0.8 percent in March following a 0.4 percent decrease in the previous month.

With shipments falling by much more than inventories, the inventories-to-shipments ratio jumped to 1.46 in March from 1.40 in February.


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Dollar Little Changed After U.S. Factory Orders

Trading 04 mai 2020 Commentaire »

U.S. factory orders data for March has been released at 10:00 am ET Monday. After the data, the greenback changed little against its major counterparts.

The greenback was trading at 106.90 against the yen, 0.9650 against the franc, 1.2434 against the pound and 1.0931 against the euro around 10:05 am ET.


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*U.S. Factory Orders Plummet 10.3% In March

Trading 04 mai 2020 Commentaire »

U.S. Factory Orders Plummet 10.3% In March


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Dollar Mixed Ahead Of U.S. Factory Orders

Trading 04 mai 2020 Commentaire »

U.S. factory orders data for March is due at 10:00 am ET Monday. Ahead of the data, the greenback traded mixed against its major counterparts. While the currency rose against the franc and the euro, it held steady against the pound and the yen.

The greenback was worth 106.87 against the yen, 0.9645 against the franc, 1.2431 against the pound and 1.0926 against the euro at 9:55 am ET


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Eurozone Sentix Investor Confidence Signals Stabilization

Trading 04 mai 2020 Commentaire »

Eurozone investor confidence rose marginally in May suggesting the beginning of a stabilization phase after undergoing a breath-taking crash due to coronavirus, covid-19 pandemic, survey data from the behavioral research firm Sentix showed Monday.

The headline Sentix investor confidence index rose to -41.8 in May from -42.9 in the previous month. Nonetheless, this was weaker than economists' forecast of -33.5.

The collapse caused by the administrative measures to halt the spread of virus went far beyond the distortions led by the financial crisis.

Assessment of the current situation deteriorated to a record low but light at the end of the tunnel was shown by an increase in the expectation values, Sentix said.

The current situation index declined to a record low 73.0 from -66.0 in April. Meanwhile, the expectations index rose to -3.0 from -15.8 a month ago.

"We are at the beginning of a stabilisation phase, which is already clearly visible in Germany and especially Austria," Sentix said.

Germany's investor confidence index improved to -35.3 in May from -36.0 in the previous month.

Sentix noted that there is now a danger that recessionary tendencies will become entrenched if the economy is too slow to recover.

Elsewhere, the survey of Professional Forecasters from the European Central Bank said the expected effects of the coronavirus, or covid-19, pandemic and subsequent mitigation measures have a significant impact on inflation, growth and unemployment rate forecasts.

Real GDP growth expectation for current year was revised down significantly. The currency bloc is forecast to shrink 5.5 percent this year instead of 1.1 percent growth estimated previously.

However, the projection for 2021 was revised up to 4.3 percent from 1.2 percent. Inflation is forecast to slow to 0.4 percent in 2020 before rising to 1.2 percent in 2021. The estimate for 2020 was revised from 1.2 percent and that for 2021 from 1.4 percent.

For 2022, inflation is seen at 1.4 percent and economic growth at 1.7 percent.


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Greece Manufacturing Sector Contracts At Record Pace

Trading 04 mai 2020 Commentaire »

Greece's manufacturing sector shrank at a record pace in April, due to coronavirus outbreak, survey results from IHS Markit showed on Monday.

The manufacturing Purchasing Managers' Index, or PMI, fell to 29.5 in April from 42.5 in March. This was the strongest deterioration since the survey began in May 1999. Any reading below 50 indicates contraction in the sector.

Output contracted at the sharpest rate in twenty-one years. The total sales decreased at the quickest since the survey began in May 1999 and new export orders fell in April. Input buying fall at the fastest since July 2015.

The number of workforce decreased in April and backlogs of work fell at a sharpest pace since the series began in November 2002. Suppliers cut their prices with cost burden falling at the quickest rate in four years.

"The impact of the escalation of the COVID-19 outbreak across Europe during April had a crippling effect on the Greek manufacturing sector," Si?n Jones, an economist at IHS Markit, said.

"Greek manufacturers expect output to decline over the coming year, with pessimism stemming from extensions to lockdowns, struggles to access credit and worries over the speed of any recovery."

"Our current forecast expects Greek industrial production to contract by 4.1% in 2020," Jones added.


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Euro Drops On US-China Tensions

Trading 04 mai 2020 Commentaire »

The euro drifted lower against its most major counterparts in the European session on Monday on heightened US-China tensions after U.S. Secretary of State Mike Pompeo said on Sunday there was "a significant amount of evidence" that the new coronavirus originated in China.

China's Global Times said in an editorial that Pompeo was "bluffing" and called on the United States to present its evidence.

Final survey results from IHS Markit showed that the euro area manufacturing sector contracted at a record pace in April as government restrictions to limit the spread of the global coronavirus, or covid-19, pandemic weighed on activity.

The final Purchasing Managers' Index fell to 33.4 from 44.5 in March. The score was also below the flash estimate of 33.6.

The euro fell to a 1-week low of 1.0534 against the franc, from Friday's closing value of 1.0548. Next key support for the euro is seen around the 1.02 region. The euro depreciated to a 4-day low of 1.0924 against the greenback, after rising to 1.0974 at 6:00 pm ET. The euro is likely to find support around the 1.08 level.

Having rallied to 117.37 at 5:30 pm ET, the euro turned lower against the yen, trading at a 4-day low of 116.61. The euro is seen finding support around the 114.00 level.

The single currency ticked down to 1.5414 against the loonie, from a high of 1.5494 seen at 8:00 pm ET. On the downside, 1.51 is likely seen as the next support for the euro.

The euro pulled back to 1.7022 against the aussie and 1.8041 against the kiwi, reversing from near 2-week peaks of 1.7196 and 1.8227, respectively touched in the Asian session. The next possible support for the euro is seen around 1.65 against the aussie and 1.72 against the kiwi. In contrast, the euro rallied to 0.8811 against the pound, its highest level since April 22. If the euro rises further, 0.89 is possibly seen as its next resistance level.

Looking ahead, U.S. factory orders data for March is set for release in the New York session.


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Czech Manufacturing Sector Deteriorates Most Since 2009

Trading 04 mai 2020 Commentaire »

The Czech Republic's manufacturing sector contracted at the fastest pace since 2009, amid coronavirus outbreak and resulting emergency measures, survey data from IHS Markit showed on Monday.

The headline manufacturing Purchasing Managers' Index, or PMI, fell to 35.1 in April from 41.3 in March. Any reading below 50 indicates contraction in the sector. The latest score was the lowest since March 2009.

Suppliers' delivery time lengthened in April and the contraction in production was the quickest since the survey began almost nineteen years ago. New orders dropped at a record pace and new export orders fell sharply due to COVID-19 outbreak.

The number of workforce was reduced at the fastest pace since the financial crisis in 2009 and backlogs of work fell at the quickest rate since the survey began in January 2003.

Business expectation fell to a new series low in April. As firms endeavored to remain competitive, output charges were reduced despite a sharper rise in input costs.

"The effects of the COVID-19 pandemic and emergency public health measures took hold across the Czech manufacturing sector in April," Sian Jones, an economist at IHS Markit, said.

"Although restriction across the Czech Republic have been slowly easing, companies expect output to fall over the coming year as worries surrounding the longevity of lockdowns, the timespan of any recovery and fears of a potential drop in investment drag confidence down," Jones added.


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Dutch Manufacturing Sector Contracts At Fastest Pace Since 2009

Trading 04 mai 2020 Commentaire »

The Dutch manufacturing sector contracted at the fastest pace in nearly eleven years in April, amid the coronavirus, or covid-19, pandemic, survey results from IHS Markit showed on Monday.

The NEVI manufacturing Purchasing Managers' Index, or PMI, fell to 41.3 in April from 50.5 in March. Any reading below 50 indicates contraction in the sector. This was the lowest recorded since May 2009.

Output declined at the quickest rate in more than twenty years of survey and new orders fell further in April.

Incoming new business deteriorated at the quickest rate since the survey began in early-2000. New export orders fell for the second straight month and at the quickest pace on record.

Workforce numbers fell in April with the rate of shedding the sharpest since July 2009. Backlogs of work fell at the quickest pace since April 2012.

Input costs fell for the first time in five months in April, while average selling prices remained broadly stable.

Firms' expectation regards to output for the 12-month collapsed to the lowest on record in April.

"It seems that Dutch manufacturers are bracing for an even bigger hit to industrial output. Unfortunately, the numbers suggest that the worst is yet to come." Albert Jan Swart, sector economist manufacturing at ABN AMRO, said.


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