Daily Analytics from Fibo Group

Unemployment rate in Australia jumps to 6.2%

According to data released today by the Australian Bureau of Statistics, in April the unemployment rate, seasonally adjusted, was 6.2%, the value of the indicator turned out to be lower than the forecasts of economists forecasting growth to 8.3%.
The Australian economy lost 594,300 jobs last month and the total number of unemployed was 12,418,700.
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We believe that due to the almost 100% integration of production cycles in China and Australia, we will see the growth of the AUD/USD currency pair to 0.70000 against the backdrop of the already begun accelerated economic recovery in China.
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Bank of Canada’s Poloz sees ‘glimmer’ of hope for oil prices

Yesterday the head of the Bank of Canada Stephen Poloz said that he sees 'the beginning of better times for oil':
- The remarks of Poloz followed the publication of a report by the International Energy Agency (IEA) on Thursday indicating global signs of recovery compared to Black April.
- The IEA attributes the 'sharp decline in production' in non-OPEC countries, led by Canada and the United States. And as we can see, dozens of Canadian energy companies have reduced production.
In his speech Poloz did not fail to recall a decrease in reserves of 700 thousand barrels. The system begins to gain momentum, which is certainly a strong wave of optimism not only for oil quotes, but also for the currency pair #USDCAD (restoration of the Canadian over three months perspective).
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Oil: Saudi Arabia sharply reduced exports

Saudi Arabia continues to push global oil prices upward, cutting production and exports to a minimum of almost 20 years. Saudi Aramco announced a sharp drop in shipments in June. Buyers will receive 10-30% less oil than ordered.
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The current situation reflects that market sentiment has changed again, only now everyone has switched from the "panic sale" mode to the "panic shopping" mode. Saudis from market destroyers became market makers again, setting an example for others and sending positive signals to the market.
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Market Watch
Oil continues to grow

In most cases, the first trading day of the week contains the least amount of important macroeconomic reports, which means trading activity in most currency pairs can remain low to moderate.

I’ll draw your attention to the report on GDP figures from in Japan for the first quarter of this year. The data came in above analysts’ expectations, which is a bullish signal for the stock market, but bearish for JPY, since any improvement in the economic situation reduces interest in safe haven assets such as the yen.

Nevertheless, buying activity in the USD/JPY currency pair remains restrained, although the bullish scenario remains a intact until the quotes return below 106.70 - the nearest strong technical support level.

And now let's move on to the trouble brewing between the USA and China, which is generating a demand for safe haven assets. Let me remind you that from last Friday, the ban on the purchase of chips made by Huawei came into force - this is the next stage of the trade war between the world’s 2 largest economies which has increased the demand for gold.

Today, gold is trading above $1,770 an ounce, which is still below the yearly highs. Any further deterioration in trade relations between the US and China will contribute to a slowdown in global economic growth and, as a result, an increase in demand for gold. The next target for buyers remains $1800 per ounce.

I will also draw your attention to the growth in the oil price and the new highs since mid-March. The price has managed to overcome the previous high at $30.55 per barrel and now there is a chance of further growth to the $35 a barrel mark.

Despite the steady increase in oil prices, demand for the Canadian dollar remains restrained. Thus, the USD/CAD currency pair is still holding above previous lows and the psychological support level of 1.4000. Nevertheless, the risk of further selling pressure continues to increase. The main bullish driver for CAD is rising oil prices. Therefore, any further growth in the “black gold” can provoke a strong selloff for this currency pair.

The above review is not a direct guide to trading, and can only be classed as a recommendation.
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Economic calendar for the week

The world is gradually moving out of quarantine: the “social distance” measures in Hong Kong are about to expire, the Indian authorities are preparing to announce new concessions in isolation, and Japan may cancel the emergency regime in megacities. Meanwhile, the chairman of the Federal Reserve will report to Congress on the implementation of financial assistance programs under the CARES law, which was adopted in response to the Covid-19 pandemic.
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Weekly calendar:
🇯🇵 GDP for the 1st quarter of 2020;
🇨🇦 Non-working day in Canada.
05/19/2020, Tuesday
🇺🇸 Fed Chairman Jerome Powell will speak to the US Senate;
🇬🇧 UK #unemployment in April.
05/20/2020, Wednesday
🇬🇧 UK #inflation. Consumer Price Index (CPI) for April;
🇪🇺 EU #inflation. Consumer Price Index (CPI) for April;
🇨🇦 Canada #inflation. Consumer Price Index (CPI) for April;
🇺🇸 Protocol of the April meeting of the Fed;
🛢 US crude oil reserves.
05/21/2020, Thursday
🇺🇸 PMI Manufacturing in the USA for May;
🇬🇧 PMI manufacturing in England in May.
05/22/2020, Friday
🇩🇪 PMI manufacturing in Germany in May.
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🇯🇵 Japan officially entered recession 🇯🇵

First quarter GDP data released on Monday underscored the expanding impact of the outbreak, with exports falling 6% - the most since the devastating earthquake in March 2011:
▪️Japan's economy in the 1st quarter declined by 0.9%; in relation to the 1st quarter of last year, the decline in GDP amounted to 2.2%. Such numbers are not news, because already in the 4th quarter of 2020, Japan's GDP was already in the red (-1.9% q/q) due to higher taxes, and even then it was clear that against the background of coronavirus, the third world economy would survive a recession.
We believe that the decline will continue in the 2nd quarter, which was subject to the most stringent quarantine restrictions.
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#fibogroup #forex #forexnews #economy #finance #trader #recession #Japan #GDP
 
UK unemployment has skyrocketed

Unemployment in the UK in January-March 2020 unexpectedly amounted to 3.9%. Statistics for the first three months of the year do not take into account the impact of the coronavirus pandemic. it should be borne in mind that the first month in which the restrictions were in effect for 30 days was April, and it is not included in the calculation of the data provided.
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Recall, it was previously reported that the Central Bank of England predicts the largest economic slowdown for the first time in more than 300 years. According to forecasts of the Bank of England, the British economy will shrink by 25% in three months, and unemployment will reach more than 9%. We believe that this negative scenario will only partially be fulfilled, which will put moderate pressure on the #GBPUSD currency pair in the second quarter.
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Market Watch
"Minutes" from the US Federal Reserve

Today’s release will begin with the rapidly deteriorating situation in US-China relations. Let me remind you that Donald Trump congratulated the President of Taiwan on his victory for a second term. China took this acknowledgement as an interference in their "internal affairs", which violates the policy of a single China.

In response to this move by the American president, China promises to retaliate, which will contribute to a further deterioration in relations, which is negative for the global economy and will further increase the demand for safe haven assets.

Moving to the European trading session, I will draw your attention to the release of weaker than expected inflation data from the UK which came in lower than an already pessimistic forecast. As a result, the GBP has fallen sharply, and the GBP/USD currency pair has dropped to the technical support level of 1.2220.

The future direction of the price movement will depend on the report from the Bank of England on monetary policy. Any hints the bank is prepared to cut interest rates may lead to a further selloff in the GBP. Only unexpected optimism from the Central bank head may support the pound.

During the US trading session, a report on changes in US oil reserves will be published. A further reduction should be good news for the black gold market.

Trading volatility in this market has fallen dramatically in the last few days and this may change with a surge occurring today. Unexpected growth in oil reserves may see American grade WTI fall to $30 per barrel.

I also note the upcoming publication of the minutes meeting of the US Federal Reserve. The so-called "minutes" usually increases trading activity in the US dollar. Any mention of a cut in Interest rates may see the US dollar come under pressure.

I will complete today's review with an analysis of the transaction for the purchase of the GBP/USD currency pair for one lot. The deal was opened at 1.2120, and a Stop Loss placed at 1.2090, and a Take Profit at the next strong resistance level of 1.2230, which now serves as a support. Profit on this transaction amounted to $1,100.

The above review is not a direct guide to trading, and can only be classed as a recommendation.
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Trade with the Fibo Group!


#MarketWatch
 
Germany and France set up €500 billion support fund

The euro rose on Wednesday after receiving support from the Franco-German proposal to create a common fund to support the economy of €500 billion for the EU countries most affected by the COVID-19 pandemic. And this is not credit money. Assistance will be allocated in the form of prizes and grants (which is absolutely free!). The first applicants for help will be Italy and Spain, who have suffered more from the coronavirus pandemic.
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Someday, such a clumsy way to support the economies of certain regions will have repercussions, but not in the next business cycle. So the Euro will continue to grow against the US dollar throughout the current year.
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Oil at 10 weeks peak

Oil is trading at a 10-week high after the publication of data on a decrease in US stocks of crude. Also, oil quotes are growing on reduction of concerns about overflowing storages and easing restrictions associated with the coronavirus pandemic. Since the beginning of May, when the transaction on limiting production in the OPEC+ format came into force, prices rose by more than a third.
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On Wednesday, May 20, when the June futures contract for WTI was expired, we expected a repeat of the April situation when the price went negative and reached almost minus $40 per barrel. However, this did not happen, which also gave a positive signal to the market.
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PMI: The economic decline slowed down in May

Preliminary PMI indices for May published today indicate a slowdown in the economies of Japan, Australia, the Eurozone and the UK (US data will be published in the second half of the day).
The indices showed a friendly growth since April historical lows, but at the same time they are still at levels corresponding to a deep recession.
Since the process of quarantine removal is smooth and limited, and consumer activity remains suppressed, it is unlikely that economies will return to growth earlier than the 3rd quarter.
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Trump accused China of "massacres around the world"

The United States continues to tighten the rhetoric nuts against China.
On Wednesday, US President Donald Trump, accused Beijing of "massacre":
“Someone crazy in China has just issued a statement blaming everyone except China for the virus that killed hundreds of thousands of people. Please explain to this dunce that only the incompetence of China, and nothing more, has caused the massacre of people on a global scale, ” Trump wrote on twitter.
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Trump's remarks are nothing but a political move ahead of the election. The classic political play is to divert the anger of the masses from itself and direct it towards a new common enemy, whom he will defeat right a week before the election (having driven into a white house on a white horse and the imprint of light fatigue in the process of seizing the evil hydra).
That is why you should not take these statements as drivers for the stock and foreign exchange markets.
However, there are still drivers here, but they are in a slightly different plane:
The US Senate passed a law on the delisting of shares of Chinese companies on US exchanges. Currently, securities of more than 150 Chinese companies with a total value of more than $1.2 trillion are traded on United States exchanges. Their possible delisting will be a sensitive blow for China.
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Market Watch
May is even worse than April

I'll start with the bad news - Incoming statistics for May shows the situation has deteriorated in comparison with April. Let me remind you that in May several European countries began to mitigate quarantine measures, and in Italy a large number of small shops reopened. Nevertheless, the incoming statistics indicate a further decline in business activity in the services and manufacturing sectors across Europe.

The business activity indices published on Thursday for the currency block and Britain came in below 50 points, indicating that in May the level of business activity was below the level in April. All European countries showed less growth in May compared to April which means the outlook for European currencies is pessimistic.

Let’s take a look at the GBP/USD currency pair, which continues to lose ground, on the back of declining retail sales and an increase in borrowed funds from the government. As a result, the risk of the currency pair returning to the psychological mark of 1.2100 continues to increase.

Now let's move on to the oil market. The collapse in oil prices is due to some changes in policies from China, which could lead to a significant decrease in oil demand. Nevertheless, don’t count on further weakness as shale oil production in the USA continues to decline. In addition, participants in the OPEC + transaction, which entered into force on May 1, continue to fulfill their obligations and this will contribute to a moderate increase in oil prices.
Due to the lack of statistics during the American trading session, trader’s attention will focus on incoming information about the conflict between the United States and China. An escalation of the conflict will contribute to higher gold prices.

I will complete the review with a deal to buy a USD/CAD currency pair. A long position was opened at the price of 1.3940 by two lots. A take Profit order is set at the next technical resistance level of 1.4020. At the time of writing the review, quotes of the pair reached the marked resistance level. Profit on this transaction amounted to $1,140.

The above review is not a direct guide to trading, and can only be classed as a recommendation.
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#MarketWatch
 
Coronavirus "infected" Brexit

The coronavirus pandemic calls into question the implementation of the plan to complete the exit of the UK. Of course, even in “precovid19” times, no one expected that in 11 months (counting from January 31), it would be possible to agree without problems on the future of trade relations between Britain and the EU - taking into account how the negotiations went on all these years ... the coronavirus pandemic in the economy and health care system makes even more doubt that Brexit will be able to be completed according to the plan without causing even more damage to the already badly worn economy.
Mass quarantine will give an occasion to both sides of the conflict to continue pulling the already stretched strap in the middle of 2021.
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Bank of Tokyo-Mitsubishi UFJ recommended selling the pound and buying the yen

Japanese retail investors have formed a large long position in the pound. Speculation on negative rates could undermine the British currency.

Currency strategists at the Bank of Tokyo-Mitsubishi UFJ forecast a stronger yen against the pound, as talk of negative rates in the UK encourages traders to sell British currency.

Retail investors from Japan could trigger sales because they have accumulated a significant amount of long positions in the pound, said Derek Halpeni, head of market research at MUFG.

Reduced profitability in foreign markets is a key factor in supporting the yen, pricing will more confidently begin to lay rates in the UK in the foreseeable future below zero, this will strengthen the tendency to buy yen.

Bank experts recommended selling the pound against the yen at 131.25 with a target of 126.60 and a stop order to buy at 134.10.

The yen has weakened in recent weeks, but MUFG experts are still confident in the potential of its strengthening.
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Market Watch
New sanctions and rising oil prices

Tensions between the US and China are growing. On Friday, the US Department of Commerce announced the blacklisting of 33 Chinese companies and government organizations, thereby putting additional pressure on the Chinese economy. In addition, the media reported that the White House administration of Donald Trump contemplated testing nuclear weapons which has not been confirmed. It is a known fact that China and Russia are already testing nuclear weapons.

Despite all this, the demand for Safe haven assets remains virtually unchanged. Gold prices remain subdued and safe haven currencies such as the JPY and CHF remain stable. This may be due to long weekends in the USA and Britain so on Tuesday there may be a surge in trading activity.

And now let's move on to the published report for changes in the business environment, as well as assessing the current situation and economic expectations from Germany. The data came in mixed and the current economic situation turned out to be worse than analysts’ expectations.

As a result, the activity of EUR buyers remains restrained. At the same time, a marked improvement in economic expectations eased the pressure on the EUR/USD currency pair. Despite this buying activity for this currency pair remains in the risk zone, until the pair returns above the technical resistance level of 1.0910.

Now let's move on to the black gold market. After a short-term, but rather deep correction, the oil price has bounced back. There are two reasons to be optimistic, and we have already discussed them several times. The first is the reduction of quarantine restriction measures, which leads to an increase in demand for oil and oil products and caused a decrease in US oil reserves.

The second, but just as important factor is the OPEC+ agreement for a cut in production. As a result, we are seeing a moderate increase in oil prices. To break through the strong technical area of resistance of $35–$36 per barrel, an additional and sufficiently strong bullish fundamental factor is needed such as an easing of lockdown measures in the USA regarding the coronavirus which will increase demand as the US is the world’s biggest consumer of oil.

The above review is not a direct guide to trading, and can only be classed as a recommendation.
==========
Trade with the Fibo Group!


#MarketWatch
 
Economic calendar for the week

Trump accuses China of all mortal sins. The world continues to drop quarantine bonds, and in Japan the emergency mode is being canceled and the liquidity gun is being charged.
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Weekly calendar:
05/25/2020, Monday
- Non-working day in the USA;
- Non-working day in the UK.
05/27/2020, Wednesday
- The European Commission will publish a proposal for an anti-crisis fund for 500 billion euros;
- Speech by ECB Chairman Christine Lagarde.
05/28/2020, Thursday
- US #GDP for the first quarter;
- US crude oil reserves.
05/29/2020, Friday
- European Union #inflation. Consumer Price Index (CPI) for May.
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Global oil demand has yet to peak, says IEA head

During the press conference, the head of the International Energy Agency (IEA) gave a very encouraging comment on the recovery of the oil market:
- “Low oil prices and a gradual economic recovery will lead to the fact that the demand for oil will not only return to the pre-crisis level, but also exceed it.”
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The global level of oil demand has not yet reached a peak, and we see that prices are steadily rising. On the one hand, Saudi Arabia stimulates this process, on the other hand, a wave of bankruptcies of companies producing shale oil has begun in the USA:
- The Financial Times reported that 17 shale oil companies have already begun bankruptcy proceedings this year.
- According to Baker Hughes Co, more than two-thirds of the total number of oil rigs in the United States has been stopped since mid-March. The number of operating towers has fallen to its lowest level since July 2009. All this only confirms that production in the USA will soon fall, even if companies re-launch existing wells earlier than expected.
- According to the Commodity Futures Trading Commission (CFTC), speculators have increased the volume of net long positions on WTI American light oil for the week ending May 19.
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EU Antivirus Fund

The path to the euro's recovery is likely to be bumpy. Four European Union countries already nicknamed the "mean four" in the media are to blame. They categorically refused to support the plan of Berlin and Paris to create a fund to help countries that were most affected by the coronavirus.
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Austria, the Netherlands, Denmark and Sweden decided to openly confront the difficult times of the pandemic because for the generosity of France and the Federal Republic of Germany they will have to pay first of all. However, in the current situation, the regulator (ECB) has no particular choice. And an antivirus fund will be established soon.
We believe that it's institution will give rise to signs of a recovery in the global and European economies, which in the end will create an opportunity for levels of the #EURUSD pair above 1.10.
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To preserve the chances of survival, Europe must prove that it is solidary and capable. On Wednesday, various options for supporting the economy will be considered. So tomorrow is a responsible trading day in all currencies associated with the Euro.
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#fibogroup #forex #forexnews #economy #finance #trader #EU #antivirus #fund #covid19 #coronavirus
 
Market Watch
Discovering the vaccine

One of the main topics in the past few weeks remains a phased plan for most countries to exit the quarantine measures. But as we can see now, business activity is still very weak. Nevertheless, investors are optimistic, because a number of large companies have announced some positive results regarding vaccine testing. As a result, the US stock market has returned into positive territory, and we are also seeing a general strengthening of risky currencies such as AUD and NZD.

Let me remind you that yesterday the US published consumer confidence figures, which, unfortunately, came in under expectations, thereby once again confirming that the recovery process will take a lot of time. As a result, we observed a moderate weakening of the USD along with most currencies.

I also draw your attention to the escalation of the conflict between the United States and China. Protests in Hong Kong reduce investor interest in this financial Hub which in turn contributes to the flow of capital to the United States, thereby supporting the US stock market.

Despite all this, the risk of the second phase of the crisis remains elevated, as indicated by the demand for gold, which is still trading above the psychological level of $1,700 per ounce.

And now we turn to the comments from the head of the ECB. She stated that the “soft” scenario of the ECB is now outdated. The economic downturn is now seen somewhere between the “medium” and the “serious” scenario. The point is that, according to the latest results for this year, the economy of the currency block will shrink from 8 to 12% but even so the market reacted very calmly to this statement. The Euro currency pairs trading volatility remained within the average indicators, indicating that traders understand this and have taken this into account.

Also, Christina Lagarde said that after the pandemic there will be no new debt crisis, thereby providing moderate support for EUR.

I will complete today's review with the “black gold” market. The price of American grade WTI returned to the technical resistance level at $34.5 per barrel. Further growth will require a strong bullish fundamental factor. Therefore, there is a risk of a moderate decline in oil prices.

The above review is not a direct guide to trading, and can only be classed as a recommendation.
=======
Trade with the Fibo Group!


#MarketWatch
 
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