Euro Muted After ECB Minutes

Trading 25 juin 2020 Commentaire »

The euro showed muted trading against its major counterparts in the European trading session on Thursday, after minutes from the European Central Bank's June meeting showed that policymakers agreed that purchases of government bonds under the pandemic emergency purchase programme and the asset purchase programme were an effective tool for delivering the price stability goal in the current environment.

Members broadly agreed that while different weights might be attached to the benefits and side effects of asset purchases, the negative side effects had so far been clearly outweighed by the positive effects of asset purchases on the economy in the pursuit of price stability, the minutes from the bank's June 3-4 meeting showed.

ECB policymakers broadly agreed to increase the size of the PEPP by ?600 billion and extend the horizon for net purchases under the scheme to at least the end of June 2021.

Members observed that expanding the size of the PEPP would help support the smooth transmission across the euro area, it added.

Survey results from market research group GfK showed that German consumer sentiment is set to recover next month reflecting the rapid reopening of the economy and society.

The forward-looking consumer sentiment index rose to -9.6 in July from revised -18.6 in June. The score was forecast to rise moderately to -12.

The euro showed mixed trading against its major opponents in the Asian session. While it rose against the yen and the franc, it fell against the greenback. Against the pound, it held steady.

The euro declined to a 3-day low of 1.1190 against the greenback and a new 4-week low of 1.0635 against the franc, from its early highs of 1.1260 and 1.0677, respectively. The next likely support for the euro is seen around 1.10 against the greenback and 1.045 against the franc.

The euro depreciated to a 1-week low of 0.9001 against the pound, after rising to 0.9065 at 8:00 pm ET. The euro is seen finding support around the 0.88 region.

The Distributive Trades Survey data from the Confederation of British Industry showed that UK retailers reported a steep fall in sales in June but stronger growth for grocers and stable volumes in the specialist food and drink sector ensured a slower pace of decline than in May.

A balance of -37 percent said sales declined in June compared to -50 percent in May. This was weaker than the expected rate of -34 percent. A net 48 percent forecast sales to decrease further next month.

The euro pulled back from its early high of 120.62 against the yen and weakened to 120.14. The euro is poised to challenge support around the 117.00 level.


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Slump In U.S. Economic Activity Unrevised At 5.0% In First Quarter

Trading 25 juin 2020 Commentaire »

A report released by the Commerce Department on Thursday showed the slump in U.S. economic activity in the first quarter was unrevised from the previous estimate.

The Commerce Department said real gross domestic product tumbled by 5.0 percent in the first quarter, unchanged from the estimate provided last month and in line with expectations.

The steep drop in GDP in the first quarter reflects a notable turnaround from the 2.1 percent jump seen in the fourth quarter of 2019.

The decrease was unrevised from the previous estimate as an upward revision to non-residential fixed investment was offset by downward revisions to private inventory investment, consumer spending and exports.

The sharp pullback in GDP in the first quarter reflected negative contributions from consumer spending, private inventory investment, exports, and non-residential fixed investment.

Positive contributions from residential fixed investment, federal government spending, and state and local government spending helped limit the downside along with a decrease in imports, which are a subtraction in the calculation of GDP.

The Commerce Department noted the 6.8 percent nosedive in consumer spending reflected a decrease in spending on services, led by healthcare as well as food services and accommodations.


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U.S. Durable Goods Orders Rebound In May, Led By Orders For Transportation Equipment

Trading 25 juin 2020 Commentaire »

After reporting a sharp drop in new orders for U.S. manufactured durable goods in the previous month, the Commerce Department released a report on Thursday showing a substantial rebound in durable goods orders in the month of May.

The Commerce Department said durable goods orders spiked by 15.8 percent in May after plunging by a revised 18.1 percent in April.

Economists had expected durable goods orders to surge up by 10.9 percent compared to the 17.7 percent nosedive that had been reported for the previous month.

The bigger than expected rebound in durable goods orders came as orders for transportation equipment skyrocketed by 80.7 percent in May after plummeting by 48.6 percent in April.

Paul Ashworth, Chief U.S. Economist at Capital Economics, noted the jump in orders for transportation equipment came as aircraft manufacturers received fewer cancellations and net orders returned to positive territory.

Orders for motor vehicles and parts also soared by 27.5 percent in May after plunging by 53.7 percent in the previous month.

Excluding the rebound in orders for transportation equipment, durable goods orders still surged up by 4.0 percent in May after tumbling by 8.2 percent in April. Economists had expected a 2.5 percent increase.

Orders for primary metals, fabricated metal products and electrical equipment, appliances and components all showed significant rebounds.

The report also said orders for non-defense capital goods excluding aircraft, a reading on business spending, jumped by 2.3 percent in May after slumping by 6.5 percent in April.

Next Thursday, the Commerce Department is due to release a separate report on factory orders in the month of May, which includes orders for both durable and non-durable goods.


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ECB Minutes: Govt Bond Purchase Programme Was Effective Tool

Trading 25 juin 2020 Commentaire »

Policymaker of the European Central Bank observed that the government bond purchases under the pandemic emergency purchase programme, or PEPP, and asset purchase programme, or APP, were an effective tool in the current environment, the minutes of the meeting held on June 4 showed Thursday.

"There was broad agreement among members that while different weights might be attached to the benefits and side effects of asset purchases, the negative side effects had so far been clearly outweighed by the positive effects of asset purchases on the economy in the pursuit of price stability," the minutes said.

"Using the ECB's capital key as the benchmark was one of the safeguards helping to maintain incentives for sound fiscal policies," the minutes said.

At the meeting, the Governing Council of the ECB increased the size of PEPP by EUR 600 billion to a total EUR 1,350 billion and retained the size of the monthly purchases under APP at EUR 20 billion.


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U.S. Jobless Claims Drop Much Less Than Expected To 1.480 Million

Trading 25 juin 2020 Commentaire »

First-time claims for U.S. unemployment benefits fell by much less than expected in the week ended June 20th, according to a report released by the Labor Department on Thursday.

The report said initial jobless claims dropped to 1.480 million, a decrease of 60,000 from the previous week's revised level of 1.540 million.

Economists had expected jobless claims to tumble to 1.300 million from the 1.508 million originally reported for the previous week.

Jobless claims pulled back further off the record high of 6.867 million set in late March, although the pace of decline has slowed considerably in the past two weeks.

The total number of initial jobless claims since the coronavirus-induced lockdowns began in March now exceeds 47 million.

The Labor Department said the less volatile four-week moving average of claims slid to 1,620,750, a decrease of 160,750 from the previous week's revised average of 1,781,500.

Continuing claims, a reading on the number of people receiving ongoing unemployment assistance, also tumbled by 767,000 to 19.522 million in the week ended June 13. With the decrease, continuing claims hit their lowest level since mid-April but remain significantly elevated.

The four-week moving average of continuing claims fell to 20,421,250, a decrease of 329,750 from the previous week's revised average of 20,751,000.

"While the number of continuing claims declined, suggesting some workers may be getting rehired, the recovery in the labor market will be slow and fitful," said a note from economists at Oxford Economics.

Next Thursday, the Labor Department is scheduled to release its more closely watched report on the employment situation in the month of June.


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Spain Producer Prices Decline Most Since 1975

Trading 25 juin 2020 Commentaire »

Spain's producer prices declined at a record pace in May, data from the statistical office INE showed on Thursday.

The producer prices index fell 8.7 percent year-on-year in May, following an 8.4 percent decline in April. This was the slowest since the series began in January 1975.

Excluding energy, producer price decreased 0.9 percent in May, following a 0.5 percent fall in the previous month.

Prices for energy declined 24.7 percent annually in May and intermediate goods prices decreased 3.5 percent.

Meanwhile, consumer goods prices rose 0.9 percent and prices of capital goods increased 0.8 percent.

On a monthly basis, producer prices decreased 0.2 percent in May, following a 3.0 percent decline in the prior month.


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South Africa Producer Price Inflation Eases In April

Trading 25 juin 2020 Commentaire »

South Africa's producer price inflation eased in April, figures from Statistics South Africa showed on Thursday.

The producer price index rose 1.2 percent year-on-year in April, after a 3.3 percent increase in March.

The main contribution for the increase in prices came from food products, beverages and tobacco products, and transport equipment in April.

Producer prices for mining industry grew 43.9 percent annually in April and prices for electricity and water increased 15.5 percent.

Prices for agriculture, forestry and fishing and, intermediate goods rose by 3.5 percent and 1.3 percent, respectively.

On a monthly basis, producer prices fell 0.7 percent in April.

Separate data from the statistical office showed that the wholesale sales declined 5.5 percent yearly in March, after a 1.4 percent increase in February.

On a monthly basis, wholesale sales fell a seasonally adjusted 2.2 percent in March, following a 1.0 percent decrease in the previous month.

For the three months ended in March, wholesale sales fell 1.4 percent following a 1.9 percent decrease in the previous three months ended February.


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Iceland Jobless Rate Rises In May

Trading 25 juin 2020 Commentaire »

Iceland's jobless rate rose for the second straight month in May, figures from Statistics Iceland showed on Thursday.

The jobless rate rose to a seasonally adjusted 5.9 percent in May from 5.3 percent in April. In March, the unemployment rate was 3.3 percent.

The number of unemployed persons increased to 14,300 in May from 11,300 in the preceding month.

The number of employed persons rose to 190,500 in May from 183,200 in the prior month.

On an unadjusted basis, the unemployment rate was 9.9 percent in May.


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Philippine CB Slashes Rate Unexpectedly

Trading 25 juin 2020 Commentaire »

The Philippine central bank lowered its interest rate unexpectedly by 50 basis points to spur growth as measures to combat the coronavirus, or Covid-19, weighed on economic activity.

The Monetary Board of the Bangko Sentral ng Pilipinas, or BSP, on Thursday, slashed the overnight reverse repurchase facility rate by 50 basis points to a record 2.25 percent. The bank was expected to hold its rate unchanged.

The bank had reduced its rate by 50 basis points each in April and March and by 25 basis points in February.

The rates on overnight deposit and lending facilities were lowered to 1.75 percent and 2.75 percent, respectively.

The board noted that a further reduction in the policy rate is required amidst a benign inflation environment as it would help mitigate the downside risks to growth and boost market confidence, Governor Benjamin Diokno said in a statement.

The board viewed that keeping an accommodative stance will further ease the cost of borrowing and ensure ample credit and liquidity in the financial system as the economy transitions toward recovery in the coming months.

The central bank said the balance of risks to the inflation outlook leans toward the downside from 2020 up to 2022 owing largely to the potential impact of a deeper and more disruptive pandemic on domestic and global demand conditions.

Inflation is seen at 2.3 percent this year and 2.6 percent in 2021.

After the flurry of rate cuts and infusion of liquidity, today's move may be the last from the central bank in 2020 with Governor Diokno likely to favour approximating positive real policy rates, ING economist Nicholas Mapa, said.

Meanwhile, the governor is also likely to hold back on reducing reserve requirements in the near term given that the financial system is flooded with liquidity with excess funds parked at the central bank's deposit facilities hitting roughly PHP 1.3 trillion in June, Mapa added.


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June 25, 2020 : EUR/USD Intraday technical analysis and trade recommendations.

Trading 25 juin 2020 Commentaire »

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On March 20, the EURUSD pair has expressed remarkable bullish recovery around the newly-established bottom around 1.0650.

Bullish engulfing H4 candlesticks as well as the recently-demonstrated ascending bottoms indicated a high probability bullish pullback at least towards 1.1065 (Fibo Level 50%).

However, a previous bearish Head & Shoulders pattern was demonstrated around the price zone between (1.1075-1.1150).

Shortly after, a sideway consolidation range was established in the price range extending between 1.0770 - 1.1000.

On May 14, evident signs of Bullish rejection have been manifested around the price zone of (1.0815 - 1.0775).

Moreover, recent ascending bottom has been established around 1.0870 which enhances the bullish side of the market in the short-term.

Intermediate-term technical outlook remains bullish as long as bullish persistence is maintained above the recently-established ascending bottom around 1.0850-1.0870.

Bullish breakout above 1.1000 has enhanced further bullish advancement towards 1.1175 (61.8% Fibonacci Level) then 1.1315 (78.6% Fibonacci Level) where bearish rejection was anticipated.

Although the EUR/USD pair has temporarily expressed a bullish breakout above 1.1315 (78.6% Fibonacci Level), negative divergence as well as bearish rejection were being demonstrated in the period between June 10th- June 12th.

This suggested a probable bearish reversal around the Recent Price Zone of (1.1270-1.1315) to be watched by Intraday traders.

That's why, Bearish persistence below 1.1250-1.1240 (Head & Shoulders Pattern neckline) was needed to confirm the pattern & to enhance further bearish decline towards 1.1150.

Trade recommendations :

The recent bullish pullback towards the price Zone around 1.1300-1.1350 (recently-established supply zone) was recommended to be watched as a valid SELL Signal.T/P levels to be located around 1.1175 then 1.1100 while S/L to be lowered to 1.1300 to offset the associated risk.

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