*US Consumer Expectations Plummet Again, Jobless Perceptions At New High: NY Fed

Trading 11 mai 2020 Commentaire »

US Consumer Expectations Plummet Again, Jobless Perceptions At New High: NY Fed


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*BoE's Haldane Sees Long-term Hit To Business Spending Due To Covid-19: Reuters

Trading 11 mai 2020 Commentaire »

BoE's Haldane Sees Long-term Hit To Business Spending Due To Covid-19: Reuters


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AUD/USD: buy on downward turns

Trading 11 mai 2020 Commentaire »

The Australian dollar made a fairly strong leap at the close of the last trading week - it reached the middle of the 65th figure paired with the US currency. Moreover, this price dynamics was caused not only by the general weakening of the greenback - by itself, the aussie also showed character and rose in price despite ambiguous fundamental factors. Bulls were able to maintain optimism, focusing only on positive signals. And there were many of them - both events and encouraging theses. Against the background of general pessimism, the Australian dollar not only stood its ground, but also showed growth, clinging to any factors of a positive nature. And today's decline should be seen solely as a correction, as a good opportunity to go buy with an upward target of 0.6550.

Let me remind you that at the beginning of last week, the Australian dollar strengthened due to the fact that the Reserve Bank of Australia announced the preservation of a wait-and-see position, while announcing a reduction in the volume and frequency of bond purchases. Although the RBA emphasized in a separate line that the interest rate would not be increased until the key inflation indicators and the level of employment reached their target levels, this fact did not prevent the bulls from heading up.

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A RBA quarterly report on monetary policy prospects was published last week. Actually, the prospects themselves were outlined at the May meeting, so this document was interesting only in the context of updated forecasts. According to the Australian regulator, the country's economy will contract by eight percent by the end of June, but then will be stably recovering, moreover, "at an accelerated pace." The RBA report said that "the initial stages of this restoration may begin quite soon, as the authorities are gradually weakening restrictive quarantine measures."

Coincidentally, simultaneously with the publication of the RBA report, Australian Prime Minister Scott Morrison announced a three-stage quarantine exit plan, calculated before the end of July. At the first stage, restaurants, cafes, shops, libraries, community centers, playgrounds and training camps will be opened, ten people will be allowed to gather in public places. At this stage, cafes and restaurants will have to comply with the restrictions of ten visitors. At the second stage of the quarantine exit program, meetings for up to 20 people will be allowed, sports halls, beauty salons, cinemas, galleries and amusement parks will open. Interstate trips will also be allowed. And in the end, by July, the government plans to complete the first and second stages and begin to implement the final stage. During this period, most workers will return to work, pubs and clubs will open again, meetings will be allowed for up to one hundred people, as well as travel abroad. Naturally, provided that in the first two stages Australia does not face the second wave of the epidemic.

By the way, today's pullback is due to the fact that the largest states of the country, where the infection level is still high, decided to postpone quarantine. In particular, New South Wales and Victoria, where Sydney and Melbourne are located, which account for almost two-thirds of coronavirus cases in the country, have decided so far to mitigate only those measures that relate to small and medium-sized businesses. This fact alarmed investors, and the pair justifiably retreated. But the governors of these states said that if the positive dynamics in the number of cases remained, they would join the government's quarantine exit strategy.

Therefore, the aussie recession may be temporary, after which the upward dynamics of AUD/USD will resume - especially if the Australian labor market data comes out better than expected. Let me remind you that the March release came out better than expected - instead of rising unemployment to 5.4%, the indicator rose to 5.2%; and instead of a decline in the number of employees to -30 thousand, the indicator has grown to almost 6,000. But it is necessary to take into account that these figures reflected only the first two weeks of March, while strict quarantine was introduced in the country in the second half of the month before last. Therefore, this week we will be able to assess the full extent of the coronavirus crisis: according to preliminary data, unemployment will increase to 8.3%, and the number of employees will decrease by 550,000 people. But if the indicators come out in the green zone, the aussie will receive very strong support, even despite the actual decline in the labor market. This will mean that the country does not follow the most pessimistic scenario and, therefore, faster than the announced forecasts will recover in the second half of the year.

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From a technical point of view, the pair on the daily chart is between the middle and lower lines of the Bollinger Bands indicator, as well as above the Kumo cloud with all the lines of the Ichimoku indicator. This indicates the priority of the upward movement. You can buy the pair from current positions with an upward target of 0.6550 (the upper line of the Bollinger Bands indicator on the same timeframe). Stop loss can be placed at 0.6400 - this is the middle line of the Bollinger Bands trend indicator.

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Evening review 05/11/2020 EURUSD. The market does not know where to go next

Trading 11 mai 2020 Commentaire »

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All business media are filled with forecasts and reasoning about how economies will get out of recession - but no one really knows how it will be - quickly or very slowly. A frightened consumer can go to the bottom for a long time and try to save as much as possible - in which case the economy will recover long and slowly.

All these considerations are empty until a country actually experiences recovery in a couple of months.

EURUSD: Buy from 1.0875.

We sell from 1.0765.

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EUR/USD and GBP/USD. Results of May 11. Germany may fall under EU sanctions for a decision by a German court on ECB misconduct

Trading 11 mai 2020 Commentaire »

4-hour timeframe

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Average volatility over the past five days: 75p (average).

The EUR/USD currency pair was trading incoherently again on the first trading day of the week. However, this is absolutely normal for Monday. No important macroeconomic information was published that day, significant fundamental information that could affect the movement of the pair and the mood of traders was also not received. Thus, the general volatility of the day within 42 points is an absolutely expected phenomenon. Market participants are again waiting for important messages and news, and at this time continue to trade the pair inside a fairly wide side channel, limited by levels of 1.0750 and 1.1000. The lower boundary of this channel has already been worked out three times, and the last time this happened at the end of last week. Thus, from a technical point of view, we expect an upward movement in the area of the psychological level of $1.10, and a new downward trend to form, not before overcoming the area of 1.0740-1.0750.

Meanwhile, a split among EU members and its leadership continues to mature and grow. According to the latest information, the European Commission may impose sanctions on Germany for violating the laws of the European Union. This was stated by President of the European Commission Ursula von der Leyen. Naturally, this is a response to the decision of the Federal Court of Germany on the ECB, which allegedly violated the laws of Germany by redeeming bonds. "I take this matter very seriously. Based on the available information, we study the next steps up to the procedure for violation of the agreements, "said von der Leyen. She said that in any case, the final word rests with the European Court. Recall that the German court considers that the purchase of bonds by the Bundesbank since 2015 takes place without the participation and approval of the German government, which contradicts German laws. The ECB's actions, according to the German Court, "deprive Berlin of economic sovereignty." The Bank of Germany was already prohibited from participating in the further purchase of bonds under the ECB program until the ECB itself proved the legitimacy of its actions and decisions.

Thus, the split between the north and south of the eurozone continues to grow. Earlier, we have repeatedly said that the main stumbling block now lies in the recovery of the European economy from the consequences of the COVID-2019 pandemic. Germany, which is considered the locomotive of the EU economy and, according to some opinions, controls the entire economy of the European Union, refuses to pay for the mistakes of the "southern countries" that did not create reserve funds for a rainy day, spent too much and did not optimize their own budgets. At this time, the EU government has no choice but to look for ways to help the most affected countries, each of which suggests that the richer countries, that is, the northern ones, that is, Germany, Austria, the Netherlands, Finland and others, will pay for this restoration. Naturally, such a state of affairs is not liked by the Nordic countries themselves, which are blocking initiatives like crown bonds, and are in favor of creating a separate fund that will lend and finance countries affected by the pandemic on special conditions. Well, poorer countries that need help believe that the "northerners" should help them, since they all represent the European Union.

Owing to these events, Italy may initiate its withdrawal from the EU, and even Germany could begin the process of withdrawal from the bloc. Especially if now the European Commission imposes fines on it or applies other sanctions for violating existing European legislation. The European Commission considers that the German court did not have the right to prohibit the Bundesbank to suspend the purchase of bonds held by the ECB.

Meanwhile, more and more experts believe that the "instigator" itself, China, will be least affected by the current pandemic crisis. First, China has already managed to curb the spread of infection, and, according to official figures, there are practically no new cases of the disease recorded there. The economy of China has already begun to recover, while the European and American economies continue to decline. At the end of 2020, the Chinese economy may show growth of 1.2%, while the American and European economies will lose from 5% to 10%. Secondly, the Chinese economy is manufacturing, the European and American economies are the service sector. During the crisis, it was the services sector that initially collapsed, which is clearly seen in business activity indices, which fell both in the United States and the European Union to almost zero. But in China, the share of the real sector of the economy is above 40%. The service sector declined, of course, in China, but less affected the overall economic decline. Thus, according to the results of the next global crisis, China may come out with the least losses.

And the most interesting question is what America will do with it, for which China is the main adversary on the world stage. Two years ago, Donald Trump made it clear that he would fight with China. Obviously, if Trump is re-elected in November, then trade wars, international conflicts will continue, and the general geopolitical situation will continue to heat up.

4-hour timeframe

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Average volatility over the past five days: 105p (high).

Unlike the euro, the GBP/USD pair began to sharply fall but also rebounded in the US trading session on May 11. It's hard to say what are the reasons for such active trading on the British pound on Monday, but the fact remains. The daily volatility at the moment is 154 points, which is one and a half times higher than the average value of the indicator. And this is considering the fact that no important information came from the United States today (otherwise the European currency would also be very actively traded) and from the UK. Thus, at the moment, the pound/dollar pair has again dropped to the lower boundary of the side 400-point channel and has increased its chances of getting out of it and forming a new downward trend. Quotes still need to overcome the area near the 1.2230 level. Only then can we conclude that the pair left the side channel and consider the option with forming a downward trend. But another rebound from this area may trigger a new round of upward movement inside the side channel. As a result, the situation for the GBP/USD pair did not change much on Monday, although the downward movement was unexpected. Rebounds from the volatility level of 1.2298 and the support level of 1.2283 may trigger a round of upward movement.

Recommendations for EUR/USD:

For short positions:

The EUR/USD pair continues to adjust on the 4-hour timeframe. Thus, it is recommended to consider selling the euro with targets in the range of 1.0750–1.0740 in the event of a price rebound from the Kijun-sen line. Formally, a rebound happened today, and the MACD indicator turned down, however, in principle, all the movement in recent days is not too confident and clear. Overcoming the range of 1.0750–1.0740 will help keep sell positions open with the target of 1.0717.

For long positions:

Long positions will become relevant for the purposes of the volatility level of 1.0913 and the resistance level of 1.0954, when the price consolidates above the Kijun-sen and Senkou Span B lines.

Recommendations for GBP/USD:

For short positions:

The pound/dollar pair tried to resume the downward movement, but again rested in the area of about 1.2300. Thus, traders are advised to sell the pair with the target of 1.2200, if the level of 1.2283 is overcome. But even in this case, shorts are fraught with increased risk.

For long positions:

It is recommended that purchases of the GBP/USD pair be considered with the objectives of the Senkou Span B line and 1.2504, but in small lots if the Kijun-sen line is again overcome.

Explanations for 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 - yellow solid line.

Volatility levels are red solid lines.

Possible price movement options:

Red and green arrows.

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*ECB's Mersch: Debate On Digital Currency Mainly Analytical

Trading 11 mai 2020 Commentaire »

ECB's Mersch: Debate On Digital Currency Mainly Analytical


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Riksbank Ready To Ease Monetary Policy Measures Further: Minutes

Trading 11 mai 2020 Commentaire »

Sweden's central bank is ready to adjust policy measures if economic developments turn out to be worse than expected due to coronavirus pandemic, according to the minutes of the monetary policy meeting held on April 27.

Governor Stefan Ingves said "We can scale up our measures if developments turn out to be worse than expected."

"And as the situation stabilises, we may need to develop and clarify the durability of the various action programmes we have launched up to now," he added.

"In order to be able to act and make the best of a bad situation, it is very important that the Riksbank, in addition to setting the repo rate, is able to fully utilise its balance sheet," the governor said.

The central bank chief observed that the Swedish economy is also vulnerable due to the imbalances on the housing market and the high level of household indebtedness.

Trying to increase demand by cutting the repo rate is not justified in the current situation, Deputy Governor Cecilia Skingsley said.

Another Deputy Governor Martin Flod?n said "Right now, there are indeed factors that suggest that a policy rate cut would not be an effective way of conducting monetary policy."

If necessary, the scope of the purchase programme can be increased further, and this applies particularly to purchases of mortgage bond, Flod?n added.

At the meeting, the central bank had kept its repo rate unchanged at zero percent and to continue purchases of government and mortgage bonds up until the end of September 2020.


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Pound Drops As Coronavirus Fears Re-emerge

Trading 11 mai 2020 Commentaire »

The pound slipped against its major counterparts in the European session on Monday, as optimism over the UK government's lockdown easing has faded and concerns emerged about the risks of a second wave of infections.

Coronavirus infections are growing in Germany, official data showed Sunday, few days after Chancellor Angela Merkel announced relaxations of social restrictions.

Northeast China and South Korea saw renewed outbreak of coronavirus, with Mainland China having reported 17 new cases on Sunday.

Prime Minister Boris Johnson on Sunday outlined a plan for reopening the economy in the coming months, allowing manufacturers and construction workers to return to work.

People will be permitted to spend unlimited time outdoors from Wednesday, visiting parks and beaches by adhering to social distancing guidelines.

The pound weakened to 1.1953 against the franc, its lowest level since April 22. The pound is seen facing support around the 1.15 level.

The pound edged down to 131.88 against the yen, from a weekly high of 133.19 hit at 2:45 am ET. The next possible support for the pound is seen around the 126.00 level.

Some Bank of Japan policymakers called for close coordination with government for policy formulation so as to avoid a Great Depression amid coronavirus pandemic, according to the Summary of Opinions at the Monetary Policy Meeting, held on April 27.

"Policy authorities must act decisively in order to avoid a second Great Depression," the summary said. "Close cooperation between fiscal and monetary authorities in terms of their policies is essential at the time of a significant economic crisis."

The pound dropped to a 4-day low of 1.2290 versus the greenback, from last week's closing value of 1.2401. Next immediate support for the pound is possibly seen around the 1.20 region.

The pound slipped to a weekly low of 0.8798 against the euro, after rising to a 5-high of 0.8706 at 5:00 pm ET. If the pound slides further, 0.89 is likely seen as its next support level.


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Turkey Jobless Rate Remains Stable In February

Trading 11 mai 2020 Commentaire »

Turkey's jobless rate remained stable in February, data from the Turkish Statistical Institute showed on Monday.

The seasonally adjusted unemployment rate was 12.7 percent in February, the same as seen in January.

On an unadjusted basis, the jobless rate fell to 13.6 percent in February from 14.7 percent in the same month last year. In January, the unemployment rate was 13.8 percent.

The number of unemployed persons rose to 4.23 million in February from 4.73 million in the same month last year.

The youth unemployment rate, which applies to the 15 to 24 age group, decreased to 24.4 percent in February from 26.1 percent in the previous year.


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Slovakia Industrial Production Falls Most Since 2009

Trading 11 mai 2020 Commentaire »

Slovakia industrial production declined at the fastest pace in nearly eleven years in March, data from the Statistical Office of the Slovak Republic showed on Monday.

Industrial production fell a working day adjusted 19.6 percent year-on-year in March, following a 1.7 percent decrease in February.

The latest decline in output was the biggest since May 2009.

Manufacturing output declined 21.4 percent in March.

Output in mining and quarrying grew 7.2 percent, while electricity, gas, steam and air conditioning sector output fell 10.4 percent.

On a monthly basis, industrial production declined 20.2 percent in March.


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