Dollar Drops As Fed Powell Pledges Addl. Measures Amid Virus Crisis

Trading 13 mai 2020 Commentaire »

The U.S. dollar depreciated against its major rivals in the European session on Wednesday, after Fed Chair Jerome Powell struck a cautious tone on economy, warning of a severe downturn from the virus outbreak, and said that the central bank is prepared to implement additional measures to prevent long-lasting economic damage.

"The scope and speed of this downturn are without modern precedent, significantly worse than any recession since World War II," Powell said in a webcast event at the Peterson Institute for International Economics.

Although the economic response had been large, it may not be the final chapter, given that the path ahead is both highly uncertain and subject to significant downside risks.

The coronavirus crisis raises longer-term concerns, the Fed Chair said, adding that deeper and longer recessions could leave behind lasting damage to the productive capacity of the economy.

The Fed is committed to use its tools to their fullest until the crisis has passed and the economic recovery is well under way, Powell noted.

Data from the Labor Department showed that U.S. producer prices plunged much more than expected in the month of April.

The Labor Department said its producer price index for final demand tumbled by 1.3 percent in April after edging down by 0.2 percent in March. Economists had expected prices to drop by 0.5 percent.

The currency showed mixed performance against its major counterparts in the Asian session. While it fell against the euro and the pound, it held steady against the yen and the franc.

The greenback lost 0.5 percent to a 2-day low of 106.74 against the yen, after advancing to 107.28 at 6:45 pm ET. The pair was worth 107.11 when it closed deals on Tuesday. The greenback is seen finding support around the 102.5 mark. The greenback fell 0.5 percent against the euro to touch an 8-day low of 1.0897. The pair had finished Tuesday's deals at 1.0847. Next key support for the greenback is likely seen around the 1.10 level.

Preliminary data from Eurostat showed that Eurozone industrial production decreased sharply in March, as several countries went into lockdown to slow the spread of the coronavirus, or Covid-19, pandemic.

Industrial production decreased 11.3 percent month-on-month, which was slightly less than the 12.1 percent slump economists had forecast. In February, output fell 0.1 percent.

The USD/CHF pair logged an 8-day low of 0.9665, down by 0.5 percent from a high of 0.9713 seen at 3:45 am ET. At yesterday's close, the pair was valued at 0.9692. The greenback is likely to face support around the 0.95 region, if it falls again.

Having strengthened to a 6-day high of 1.4085 at 8:00 pm ET, the greenback pulled back 0.6 percent to 1.4006 versus the loonie. The greenback was trading at 1.4077 per loonie at yesterday's close. Should the greenback falls further, it is likely to test support around the 1.35 region.

The greenback reached as low as 1.2340 versus the pound, recording a fall of 0.8 percent from a high of 1.2245 set at 5:00 pm ET. The greenback is poised to challenge support around the 1.25 mark.

Data from the Office for National Statistics showed that the UK economy contracted the most since the global financial crisis in 2008, due to the measures adopted to reduce the transmission of the coronavirus.

Gross domestic product fell 2 percent sequentially in the first quarter, which was the largest decline since the fourth quarter of 2008.

The greenback moved down to 0.6524 versus the aussie, compared to yesterday's New York session close of 0.6471. Continuation of the greenback's downtrend may lead it to a support around the 0.70 region.

The greenback held steady versus the kiwi, after having retreated from the previous session's 6-day high of 0.6000. At yesterday's trading close, the pair was quoted at 0.6076.


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*OPEC Cuts Global Oil Demand Forecast Again

Trading 13 mai 2020 Commentaire »

OPEC Cuts Global Oil Demand Forecast Again


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*OPEC Cuts Global Oil Demand Forecast Again

Trading 13 mai 2020 Commentaire »

OPEC Cuts Global Oil Demand Forecast Again


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

Brazil Retail Sales Fall Sharply Amid Covid-19 Scare

Trading 13 mai 2020 Commentaire »

Brazil's retail sales decline at a sharp pace in March, as people chose to spend only on essentials such as food amid the crisis triggered by the spread of the coronavirus, or Covid-19, figures from the statistical office IBGE showed on Wednesday. Retail sales decreased a seasonally adjusted 2.5 percent month-on-month after a 0.5 percent gain in the previous month. Economists had forecast a 7.7 percent decline.

Among the different groups, sales of textile and clothing logged a massive 42.2 percent fall, followed by books and stationery with a 36.1 percent slump. Sales in department stores and supermarkets grew 16.3 percent, and including food sales, the increase was 14.6 percent. Pharmaceuticals and cosmetics segment logged a sales growth of 1.3 percent versus 0.7 percent in the previous month.

Broad retail sales, which include sales of automobiles and construction goods, decreased 13.7 percent monthly in March after a 0.5 percent gain in each of the previous two months. Sales of automobiles crashed 36.4 percent, while those of construction material dropped 17.1 percent. On a year-on-year basis, retail sales fell an unadjusted 1.2 percent in March after a 4.7 percent increase in the previous month. That was the first fall in 12 months. Economists were looking for a 6 percent decline.

Broad retail sales dropped 6.3 percent after a 3 percent increase.


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Brazil Retail Sales Fall Sharply Amid Covid-19 Scare

Trading 13 mai 2020 Commentaire »

Brazil's retail sales decline at a sharp pace in March, as people chose to spend only on essentials such as food amid the crisis triggered by the spread of the coronavirus, or Covid-19, figures from the statistical office IBGE showed on Wednesday. Retail sales decreased a seasonally adjusted 2.5 percent month-on-month after a 0.5 percent gain in the previous month. Economists had forecast a 7.7 percent decline.

Among the different groups, sales of textile and clothing logged a massive 42.2 percent fall, followed by books and stationery with a 36.1 percent slump. Sales in department stores and supermarkets grew 16.3 percent, and including food sales, the increase was 14.6 percent. Pharmaceuticals and cosmetics segment logged a sales growth of 1.3 percent versus 0.7 percent in the previous month.

Broad retail sales, which include sales of automobiles and construction goods, decreased 13.7 percent monthly in March after a 0.5 percent gain in each of the previous two months. Sales of automobiles crashed 36.4 percent, while those of construction material dropped 17.1 percent. On a year-on-year basis, retail sales fell an unadjusted 1.2 percent in March after a 4.7 percent increase in the previous month. That was the first fall in 12 months. Economists were looking for a 6 percent decline.

Broad retail sales dropped 6.3 percent after a 3 percent increase.


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*U.S. Crude Oil Inventories Decrease By 0.7 Million Barrels In Week Ended 5/8

Trading 13 mai 2020 Commentaire »

U.S. Crude Oil Inventories Decrease By 0.7 Million Barrels In Week Ended 5/8


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*U.S. Crude Oil Inventories Decrease By 0.7 Million Barrels In Week Ended 5/8

Trading 13 mai 2020 Commentaire »

U.S. Crude Oil Inventories Decrease By 0.7 Million Barrels In Week Ended 5/8


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UK Economy To Shrink 25-30% In Q2: NIESR

Trading 13 mai 2020 Commentaire »

The United Kingdom is set to witness a collapse in its gross domestic product in the second quarter due to the lockdown imposed to slow the spread of the coronavirus, or Covid-19, pandemic, the National Institute for Economic And Social Research predicted on Wednesday. Earlier in the day, data from ONS showed that GDP dropped 2 percent in the first quarter of 2020, which was the worst fall since the global financial crisis of 2008. "In light of the preliminary release, we forecast growth in the second quarter to decline sharply by about 25 to 30 per cent," NIESR said.

In the month of March, GDP fell 5.8 percent driven by record falls in construction and services, ONS said. "In a period of radical uncertainty, the short-term economic impact of Covid-19 is becoming clearer with the publication of GDP data for March, where output is expected to be lower by about 25 per cent in months when the lockdown is in place," NIESR Senior Economist Kemar Whyte said. "Restarting the economy by promoting activities in upstream sectors such as construction, some manufacturing and the government will increase overall activities via helpful spillovers."

Whyte warned that without a vaccine, there is significant risk of a second wave which could trigger a further setback in the economy.


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UK Economy To Shrink 25-30% In Q2: NIESR

Trading 13 mai 2020 Commentaire »

The United Kingdom is set to witness a collapse in its gross domestic product in the second quarter due to the lockdown imposed to slow the spread of the coronavirus, or Covid-19, pandemic, the National Institute for Economic And Social Research predicted on Wednesday. Earlier in the day, data from ONS showed that GDP dropped 2 percent in the first quarter of 2020, which was the worst fall since the global financial crisis of 2008. "In light of the preliminary release, we forecast growth in the second quarter to decline sharply by about 25 to 30 per cent," NIESR said.

In the month of March, GDP fell 5.8 percent driven by record falls in construction and services, ONS said. "In a period of radical uncertainty, the short-term economic impact of Covid-19 is becoming clearer with the publication of GDP data for March, where output is expected to be lower by about 25 per cent in months when the lockdown is in place," NIESR Senior Economist Kemar Whyte said. "Restarting the economy by promoting activities in upstream sectors such as construction, some manufacturing and the government will increase overall activities via helpful spillovers."

Whyte warned that without a vaccine, there is significant risk of a second wave which could trigger a further setback in the economy.


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Powell: Fed May Take Additional Steps But Not Considering Negative Rates

Trading 13 mai 2020 Commentaire »

Citing the unprecedented speed and scope of the coronavirus-induced economic downturn, Federal Reserve Chair Jerome Powell said Wednesday the central bank may take additional steps to avoid an extended period of low productivity growth and stagnant incomes.

"At the Fed, we will continue to use our tools to their fullest until the crisis has passed and the economic recovery is well under way," Powell said during a webcast hosted by the Peterson Institute for International Economics.

However, Powell signaled the Fed remains reluctant to impose negative interest rates, which President Donald Trump has repeatedly called on the central bank to enact.

"I know there are fans of the policy, but for now it's not something that we're considering," Powell said. "We think we have a good toolkit and that's the one that we will be using."

The Fed Chief noted the economic outlook is "both highly uncertain and subject to significant downside risks" and suggested it may be necessary for Congress to provide additional stimulus.

"Additional fiscal support could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery," Powell said. "This tradeoff is one for our elected representatives, who wield powers of taxation and spending."

Powell's comments come a day after House Democrats unveiled a new $3 trillion coronavirus relief bill that is likely to face considerable opposition in the Republican-led Senate.

While the Fed and Congress have already provided considerable stimulus that Powell described as "both timely and appropriately large," he noted the initial response "may not be the final chapter."

Powell argued the coronavirus pandemic raises a new set of questions, including how quickly it can be brought under control, whether new outbreaks can be avoided as the economy reopens and how long it will take to develop new therapies or a vaccine.

"The answers to these questions will go a long way toward setting the timing and pace of the economic recovery," Powell said. "Since the answers are currently unknowable, policies will need to be ready to address a range of possible outcomes."


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