Dutch Manufacturing Sector Contraction Worst Since May 2009

Trading 02 juin 2020 Commentaire »

The Dutch manufacturing sector contracted at the fastest rate in eleven years in May, amid the coronavirus, or Covid-19, pandemic, survey results from IHS Markit showed on Tuesday.

The NEVI manufacturing Purchasing Managers' Index, or PMI, fell to 40.5 in May from 41.3 in April. Any reading below 50 indicates contraction in the sector. This was the lowest level since the global financial crisis in May 2009.

Output declined at the second-fastest pace in record in May, and new orders fell for the third straight month with the rate of reduction quickest on record.

The volume of new work from abroad decreased in May and the rate of reduction was the quickest in the series' more than twenty-year history.

The number of workforce was reduced in May, with the rate of decline the second quickest in nearly eleven years. The rate of backlogs of work depletion was the fastest seen over seven years.

The volume of input orders fell at the most marked rate since April 2009, and stocks of input declined for the first time since February and at the quickest pace for seven years.

On the price front, cost burden declined for the second month in a row with the rate of deflation quickest since April 2016, and average charges were reduced in May to improve sales and attract new business.

The 12-month outlook remained negative for second straight month in May as companies reported uncertainty related to the Covid-19 pandemic.

"Some companies, such as producers of packaging for consumer goods, will probably benefit from the easing of 'lockdowns', both domestically and abroad," Albert Jan Swart, manufacturing sector economist at ABN AMRO, said.

"However, demand for investment goods in particular is expected to remain sluggish in the short term."


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U.S. Dollar Lower On Recovery Hopes

Trading 02 juin 2020 Commentaire »

The U.S. dollar depreciated against its most major counterparts in the European session on Tuesday, as investors pinned hopes on economic recovery after easing of restrictions across the globe.

Hopes for a global coronavirus recovery helped offset fears about U.S.-China tensions and political unrest in the U.S.

Overnight data showed that U.S. manufacturing activity improved in May after logging an 11-year low in the previous month.

Key economic reports due this week include ADP private payrolls data, ISM non-manufacturing PMI and U.S. jobs data for May.

The greenback declined to 1.2573 against the pound, its lowest level since May 1. If the greenback extends decline, 1.30 is possibly seen as its next support level.

Data from the Nationwide Building Society showed that U.K. house prices fell 1.7 percent month-on-month in May, in contrast to a 0.9 percent rise in April as the impact of the coronavirus pandemic filtered through the property market.

This was the biggest fall since February 2009. Economists had forecast a fall of 1 percent.

After rising to 1.1115 against the euro at 2:45 am ET, the greenback fell to a 2-1/2-month low of 1.1188. On the downside, 1.15 is possibly seen as the next support level for the greenback.

The greenback fell to more than a 2-month low of 0.9573 against the franc, compared to Monday's closing value of 0.9609. Further weakness in the currency may locate support around the 0.91 level.

Data from the Federal Statistical Office showed that Switzerland's retail sales declined at a faster rate in April, amid the Covid-19 outbreak.

Retail sales declined a working-day adjusted 19.9 percent year-on-year in April, following a 5.8 percent fall in March.

The greenback weakened to more than a 4-month low of 0.6869 against the aussie, 2-1/2-month low of 0.6318 against the kiwi and a 1-year low of 1.3493 against the loonie, off its early highs of 0.6775, 0.6263 and 1.3585, respectively. The greenback may challenge support around 0.70 against the aussie, 0.64 against the kiwi and 1.30 against the loonie, if it slides again.

In contrast, the greenback remained higher against the yen, with the pair trading at 107.77. Next immediate resistance for the greenback is likely seen around the 110.00 level.


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Gold Little Changed In Lackluster Trade

Trading 02 juin 2020 Commentaire »

Gold prices were little changed in lackluster trade on Tuesday as investors weighed prospects of a post-pandemic economic recovery against deteriorating U.S.-China relations and violent protests in the United States.

Spot gold slid 0.1 percent to $1,738.55 per ounce, while U.S. gold futures were little changed at $1,749.25.

As many businesses reopen across the world, investors are pinning hopes on economic recovery and corporate earnings growth.

U.S. manufacturing activity eased off an 11-year low in May and China's factory activity unexpectedly returned to growth in the month, suggesting that the worst of the economic downturn from the coronavirus pandemic was behind.

U.S.-China tensions persist, with reports suggesting that Chinese state-owned agricultural companies have been ordered to pause purchases of U.S. farm goods, including soybeans.

Meanwhile, U.S. President Donald Trump threatened to deploy the military to quell civil unrest erupting across the nation over George Floyd's death.


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Oil Prices Rally Ahead Of OPEC+ Meeting

Trading 02 juin 2020 Commentaire »

Oil prices rose sharply on Tuesday as traders waited to see whether major crude producers will extend their huge output cuts at a meeting as early as Thursday.

Benchmark Brent crude climbed 2.9 percent to $39.42 a barrel, while U.S. West Texas Intermediate (WTI) crude futures were up 2.8 percent at $36.45 a barrel.

Recent supply cuts by the Organization of the Petroleum Exporting Countries and allies, including Russia, helped Brent prices double over the past six weeks. However, prices are still down about 40 percent for the year.

It is expected that OPEC+ producers, the 23-nation group, will extend their output cuts through July or August at an online meeting likely on June 4.

They had agreed in April to cut their total oil output by 9.7 million barrels per day (bpd) from May 1 through June 30.

A Genscape report on Monday showing a drop in crude stockpiles at Cushing, Oklahoma also buoyed prices ahead of the American Petroleum Institute's inventory report due out later in the day.


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Between two lights: gold hung in a narrow range

Trading 02 juin 2020 Commentaire »

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The price of gold began to decline today against the background of gradually fulfilling hopes for a faster recovery in global economies after the lifting of quarantine measures related to the COVID-19 pandemic. At the same time, the growing tension between the United States and China, as well as riots in America, are pushing the precious metals market in the opposite direction, which does not allow the fall to worsen. Thus, gold began to decline, which so far has its limits.

The price of gold fell by 0.15% this morning and reached the level of $ 1,737.46 per troy ounce. Support for gold is at the level of $ 1,720 per troy ounce, and the resistance was at around 1,761 dollars per troy ounce.

Today it has become clear that multidirectional forces press on gold, which does not allow it to choose a specific vector for movement. There are factors that support and make us move up, and there are pressures that pull down. On the one hand, this allows you to stay within the same range, almost eliminating a sharp and rapid drop. On the other hand, growth is also severely limited. Until the forces outweigh in one direction or another, we will observe movement in an extremely narrow corridor.

Of the news that market participants pay special attention to, it is worth noting the continuation of the conflict between Beijing and Washington, which could lead to the abolition of Hong Kong privileges and its status as a global financial center. The situation is aggravated by retaliatory measures by the Chinese authorities, which have already canceled the purchase of agricultural products produced in the United States of America. This may result in complete trade isolation of the largest economies in the world, which in turn will negatively affect the general economic climate of the world. The rupture of US-Chinese trade relations is a support factor for gold, which means that it will grow in value.

However, the positive attitude is offset by negative news, which should include the protest movements in the United States of America that erupted due to another act of racial discrimination that resulted in death.

The situation on the stock exchanges of the world is now more than favorable, and this is a counterargument for the purchase of precious metals. Investors still have the courage, and they do not need gold as a safe-haven asset.

According to experts, the short-term movement of gold will be in the range of 1,700 to 1,750 dollars per troy ounce. Trade within these limits will continue until there is serious pressure from the outside world.

The cost of palladium decreased by 0.12% and stopped at around 1,958.99 dollars per troy ounce. Silver slowed down by 0.18% and reached the level of 18.24 dollars per ounce. The price of platinum fell 0.81%, pushing the metal one line at $ 840.75 an ounce.

Copper futures for July delivery fell by 0.24% which makes it $ 2.642 per pound.

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EUR/USD. American riot, coronavirus and European confrontation

Trading 02 juin 2020 Commentaire »

The euro-dollar pair came close to the 12th figure today, updating almost three-month price highs. The last time the pair was in this price area was in mid-March, on the way to the annual low of 1.0653. Today, buyers are clearly dominant - with slight downward pullbacks, the pair has been growing for a week, rising from the support level of 1.0880 to the current local high of 1.1195. And if the price strengthened last week mainly due to the euro's growth and the vulnerability of the dollar, now the upward price dynamics is only a result of the devaluation of the US currency. On the contrary, European events act as a kind of anchor, not allowing the bulls to momentarily break through the resistance level of 1.1200. However, first things first.

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The riots in the U.S. at first did not bother investors, as they did not bode anything extraordinary- unfortunately, incidents like Minneapolis occur in the country with a certain regularity, and, as a rule, retaliatory protests are local and short-lived. However, current events have gone beyond the expected scenario, gaining completely different perspectives - especially in the light of the coronavirus pandemic. At the moment, curfews have been imposed in nearly 80 cities in the United States, while protests in one form or another are taking place in all major cities. In 15 states, National Guard forces came to the rescue of local authorities, and the number of detainees is in the thousands (totaling about 4,400 people across the country). To many, the current situation resembles the year 1968, when Martin Luther King was killed. According to journalists, then there was also an epidemic and there were also mass protests. Indeed, the scale is incomparable (especially with regard to the epidemiological situation), so some experts predict the worst summer for the United States since the Great Depression.

Donald Trump added fuel to the fire, who in his usual manner declared that he could use the army to suppress riots. This initiative was criticized by many governors (mainly from the pool of Democrats) and, of course, by Joe Biden. Trump's future rival in the presidential election warned that the head of the White House cannot, by his sole decision, direct the army against his own people. The fact is that according to the law "Posse Comitatus Act", which was adopted in 1878, the armed forces cannot operate inside the country without the permission of Congress. Trump, in turn, threatens to use the law "Insurrection Act" (it was adopted even earlier, in 1807), which has never been applied in the United States.

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However, traders are worried not so much about the riots amidst the political crisis, as the risk of a second wave of the epidemic. There can be no talk of any social distance at such rallies, while thousands and tens of thousands of Americans are involved in these events. Possible prospects emerge by themselves: a re-outbreak, a new lockdown, rising unemployment, a further slowdown in the economy, and a protracted recession. Such a scenario looks very realistic and quite frightening against the background of recently published macroeconomic reports. That is why the dollar is now so responsive to the news flow regarding the dynamics of the protest movement. After all, do not forget that the United States is still leading in the number of infected and dead from coronavirus. According to the latest data, COVID-19 was confirmed in 1,837,170 people over there. Nevertheless, after the country reached the so-called "plateau", almost all regions decided to weaken the quarantine, thereby launching the country's economy. If protests are followed by an outbreak of disease, Americans will have to return to the "zero point".

The euro also has its own problems. The political conflict in Europe, although less noticeable in the information space, nevertheless carries a potential risk for the growth prospects of EUR/USD. We are talking about the notorious anti-crisis plan of the European Commission. The proposed plan provides that the affected EU countries will receive 500 billion euros in subsidies, and 250 billion in loans. However, Austria officially opposed the initiative yesterday. According to the Minister of Finance Gernot Blumel, Vienna will not approve the proposed plan, as it is "a heavy burden for Austrian taxpayers." Earlier, a similar position was voiced by the representatives of the Netherlands, Sweden and Denmark. They reacted somewhat more softly to the Ursula plan, calling Brussels' initiative "the starting point for negotiations."

As you know, according to the procedure, this plan should be considered by all member states of the European Union and express their opinion at the corresponding summit (according to some forecasts, such a summit may take place at the end of July). But even if the program is approved in principle, another procedural step is needed for its implementation: it is necessary to increase the "ceiling" (that is, the upper limit) of the EU's own resources. And for this, ratification of the national legislative bodies of the EU countries is needed. In other words, the proposed program should go through the millstone of the parliaments of all 27 member states of the EU.

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In other words, if Austria continues to show integrity in this matter, then the European currency will become an anchor for the EUR/USD pair, at least slowing down the price increase. However, this threat is still potential in nature: such heavyweights like Germany and France are allies of Brussels, so Austria's position does not bother EUR/USD traders. At least at the moment there is general confidence in the market that Vienna will be able to convince - perhaps with the help of some compromises regarding the amount of mandatory payments.

Thus, the rebellion in America is still the number one topic for the pair's traders. Mass riots could potentially have widespread and extremely negative economic consequences for the country. Therefore, if the situation on this front is aggravated, the dollar will continue to plunge. And vice versa - if the authorities manage to repay the wave of protests, a correction will follow for the pair, especially considering the proximity of the June meeting of the European Central Bank (Thursday, June 4).

From a technical point of view, the pair maintains its growth potential - on the daily chart, the pair is located on the upper line of the Bollinger Bands indicator and above all the lines of the Ichimoku indicator. On the weekly chart, the price is located in the Kumo cloud, and the closest growth target is the upper border of this cloud - the 1.1225 mark. The next resistance level is the upper Bollinger Bands line at W1 and the price is 1.1260.

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*U.S. Dollar Slides To 1.2563 Against Pound, Lowest Since May 1

Trading 02 juin 2020 Commentaire »

U.S. Dollar Slides To 1.2563 Against Pound, Lowest Since May 1


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*U.S. Dollar Drops To 2-1/2-month Low Of 1.1184 Against Euro

Trading 02 juin 2020 Commentaire »

U.S. Dollar Drops To 2-1/2-month Low Of 1.1184 Against Euro


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Evening review on EURUSD for June 2, 2020

Trading 02 juin 2020 Commentaire »

Comparison of the two graphs:

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This is the USDJPY in D1 chart which shows a clear signal for the growth of the dollar.

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This is the euro in H4 chart which clearly shows growth against the dollar.

With the given data above, we, therefore, conclude that one of these instruments is deceiving us. But it could also mean that either the euro or the dollar will rise.

You may consider purchases from 1.1155 euros. Stop at 1.1110 and target at 1.1500.

Note that the employment report is set for tomorrow.

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June 2, 2020 : GBP/USD Intraday technical analysis and trade recommendations.

Trading 02 juin 2020 Commentaire »

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Recently, Bullish persistence above 1.2265 has enhanced another bullish movement up to the price levels of 1.2520-1.2590 where significant bearish rejection as well as a quick bearish decline were previously demonstrated (In the period between 14th - 21 April).

Moreover, Atypical Bearish Head & Shoulders reversal pattern was in progress. The GBP/USD pair was demonstrating the Right Shoulder of the pattern.

Hence, Bearish persistence below 1.2265 (Reversal Pattern Neckline) was needed to confirm the pattern. Thus, enhance another bearish movement towards 1.2100, 1.2000 then 1.1920.

Moreover, the price zone of 1.2300-1.2280 corresponding to a short-term uptrend was breached to the downside failing to provide enough bullish support for the pair. Thus, enhancing the bearish side of the market.

Temporary bearish breakout below 1.2265 was demonstrated in the period between May 13 - May 26.

However, immediate bullish rebound has been expressed on May 18.

On the other hand, the price zone of 1.2520-1.2600 (Backside of the broken Uptrend) stands as a recently-established SUPPLY-Zone to offer bearish rejection and a valid SELL Entry for the pair in the short-term.

Hence, further bearish decline would be expected to be enabled towards 1.2020 as a projection target for the reversal pattern provided that no bullish breakout above 1.2600 is expressed.

Trade recommendations :

Intraday traders can still consider the current bullish pullback towards the price zone of 1.2520-1.2600 as a valid SELL Entry.

T/P level to be located around 1.2345, 1.2265 and 1.2150 while S/L should be placed above 1.2650.

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