Analytics By Fibo Group

[Fibo_Group_Forex_Broker]

Economic sentiment in the Eurozone - a record collapse

Eurozone statistics released today recorded the expected deterioration in economic sentiment in all areas. The most pessimistic mood prevails in the services sector, which was also clear from the PMI indices published earlier.

Consumer sentiment is close to the lows that were observed in 2009 and at the peak of the European debt crisis at the end of 2012.
Amid weakening of quarantine restrictions that have already begun in European countries, perhaps in May we will see a recovery in consumer sentiment and business. These indices partly characterize the willingness of households to spend, and companies - to invest.

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[Fibo_Group_Forex_Broker]

US GDP: The collapse of the economy began in the 1st quarter

• In the first quarter, GDP in America fell by 4.8% (which is more than the predicted values and this figure may actually be even greater, because there will be corrections within a month).
• A quarterly decline in US GDP occurred for the first time in more than 5 years (2014 was a 1.1% drop), although not as bad as in the 2008 mortgage crisis (a drop of 8, 4% in the fourth quarter).
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  We believe that current data is not an absolute anti-record and the main collapse is yet to come.
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[Fibo_Group_Forex_Broker]

Fed: interest rate unchanged

The regulator kept the base rate after it unscheduled twice in March to the level of 0-0.25% per annum. The rate was previously at this level in the period from December 2008 to December 2015.
The Fed has decided to lower rates in response to the dire economic consequences of an outbreak of coronavirus.

The press release also says that the Fed will continue to buy back mortgage and treasury bonds in the amount necessary to support the market (we recall that despite such statements, QE volume decreased by 6 times. Check our previous posts).

The decision coincided with the forecasts of most analysts. The dollar did not make significant fluctuations.

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[Fibo_Group_Forex_Broker]

Market Watch
When all is well

This week, as well as the month as a whole, began with clear optimism for the oil market. Let me remind you that on May 1, the OPEC+ deal to reduce oil production came into force. In addition, most countries have already begun to relax restrictive measures, which helps to increase the physical demand for petroleum products. As a result, we simultaneously received two strong bullish fundamental factors: a decrease in production and an increase in demand.

Against this background, the price of oil of the American grade WTI reached $26 per barrel. In addition, I draw attention to the fact that over the past five trading days, the oil price doubled without a visible correction. As a result, the risk of a short-term decline continues to increase. Thus, active market purchases remain in a high-risk area.

And now let’s move on to the publication of data on changes in the level of business activity in the eurozone services sector. Actual data turned out to be better than expected, but this publication did not support EUR.

In the first half of the European trading session and immediately after the publication of this report, we observed a weakening of the EUR/USD currency pair. The closest strong technical support level and target for sellers is still at 1.0775.

I will also draw your attention to the general strengthening of JPY. For example, the EUR/JPY currency pair has had higher lows since April 2017, while GBP/JPY has fallen by more than 150 points over the past couple of days. All this indicates a decrease in interest in risk, because European currencies are risky assets, while JPY is a safe haven currency.

We conclude today’s review with an analysis of upcoming reports during the American trading session. First of all, I will draw your attention to the data on the employment market. A sharp decrease in the negative value may support the USD, while the release of weaker data in comparison with the forecast will contribute to a moderate weakening of the US dollar.

It is also important to pay attention to the report on changes in reserves and oil production in the United States. A further slowdown in reserves growth and a decrease in production volumes may provide additional support for oil quotes at the time of release.

The above review is not a direct guide to trading, and can only be classed as a recommendation.

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#MarketWatch

[Fibo_Group_Forex_Broker]

Economic calendar for the week

As part of the new trading week, world leaders will hold a virtual meeting to accelerate vaccine development and stop the pandemic. While Chinese scientists speculate on the ‘wave’ return of #covid19 Warren Buffett continues to sit in the cache.

Weekly calendar:
05/05/2020, Tuesday

• Reserve Bank of Australia rate;
• UK #PMI for April.
  05/06/2020, Wednesday
• New Zealand #unemployment for the 1st quarter of 2020;
• US Crude Oil Reserves.
  05/07/2020, Thursday
• Bank of England rate;
• Protocol of the meeting of the Committee on the PrEP of England;
• Bank of England Inflation Report.
  05/08/2020, Friday
• #NonFarmPayroll US Labour Market Data Block for April;
• Canada #unemployment for April.
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[Fibo_Group_Forex_Broker]

Oil price in a corkscrew: US oil storage facilities are full

The collapse of oil quotes in Europe and the United States began around 14.00 Moscow time after the European Commission published an updated macro forecast. In it the EC estimated the decline in the economy of the euro area at 7.75% for the year with a recovery of 6.5% in 2021.

ADP later reported that in April, the US economy lost 20 million jobs, having lost all of the labour market growth over the past 12 years in a month.

The ‘last straw’ was data from the Energy Information Administration. Over the past week, in the States, crude oil reserves in storage increased by 4.6 million barrels, including by 2 million barrels in a hub in Cushing.

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[Fibo_Group_Forex_Broker]

Bank of England: saved the rate unchanged and prepared for recession

• Like other central banks around the world, the Bank of England intervened sharply in an attempt to stop the effects of the coronavirus.
  The bank lowered it’s numbers to it’s current record low at two emergency meetings in early March. The bank also increased it’s quantitative easing (QE) program by £200 billion. Today, the regulator left the basic interest rate unchanged (0.1%).
• The Bank of England said the UK economy could contract by 14 percent in 2020, and then rebound sharply in 2021, as it keeps interest rates at a record low.
• As coronavirus destroys the economy and oil prices, inflation is expected to fall below one percent in the coming months. It will remain low and recover only to a two percent target in 2022.
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[Fibo_Group_Forex_Broker]

ADP Report: US economy lost 20 million jobs

The coronavirus outbreak has closed offices, factories, schools, construction sites and shops that promote the US economy. On Wednesday, ADP’s payroll report showed the depth and magnitude of job losses that did not leave indifferent any part of the world’s largest economy. American businesses have shrunk by an unprecedented 20.2 million jobs, a major collapse.
This report is two days ahead of an official monthly US labour market data. We believe that today’s report will show that US unemployment will reach 16 percent, compared with 4.4 percent in March. That will give rise to the strongest volatility and strengthening of the dollar across the entire spectrum of the market.

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[Fibo_Group_Forex_Broker]

Market Watch
25 million unemployed in the USA

With the opening of the European trading session on Thursday, news was released that the Bank of England left interest rates on hold and asset purchases unchanged.The lack of monetary easing provided only short-term support for the GBP so there will need to be more good news for the pound to strengthen further.

I note another very important publication, which took place on Thursday – The report in the number of applications for unemployment benefits in the United States. Data came in well below expectations which put pressure on the US dollar against major currencies.

For example, the GBP/USD currency pair after hitting a session low at 1.2265 rose by more than 140 points. There may be further growth when the next report on the US labor market is released.

Today, during the American trading session, the latest unemployment rate and non-farm payrolls data will be released, and the news is expected to be dissapointing. Economists expect job numbers to fall by 22 million and an increase in unemployment to a record level of 16%. If analysts are correct or the figures are even worse, the USD may come under further pressure.

And now let’s move on to the oil market, where we are witnessing some sort of stabilization. Yes, trading volatility remains elevated on the third trading day, and the price of the American WTI crude oil remains between $ 23 and $ 26 per barrel. This is where the opinions of traders and investors diverge: some say that by June the existing oversupply will be eliminated, while others are much more pessimistic. As a result, we are witnessing a phase of uncertainty, which is expected to last until more news hits the market.

We will complete the review with a deal to sell the USD/CAD currency pair from the technical resistance level of 1.4150. The Stop Loss order was placed 30 points above the transaction opening price, and the Take Profit order at the nearest support level 1.4020. The Profit on this transaction amounted to $930. Total risk remained below $220, which allowed for a risk to profit ratio of more than 1 to 4.

The above review is not a direct guide to trading, and can only be classed as a recommendation.

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#MarketWatch

[Fibo_Group_Forex_Broker]

USA: Unemployment 14.7%

Unemployment in the USA is at its maximum since the war. 20.5 million jobs - and the real situation is even worse.

In the last economic cycle, the US economy created 22.7 million new jobs. In March, the economy lost 0.9 million jobs, and in April another 20.5 million. Thus, losses account for 94% of the created over a decade. In May, jobs are likely to continue to decline.

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[Fibo_Group_Forex_Broker]

Economic calendar for the week

The global economy is bottoming out, with China appearing to have bottomed out in February, and the US has been pulling in since the end of April. The main threat to the global economy is the repeated increase in the number of infections as quarantine measures are weakened.

The optimism associated with lifting restrictions in a number of major countries seems premature to some investors. A new wave of decline may overwhelm the assets of developing countries in the second or third quarter, however, there is a chance that at the same time, stocks, bonds and currencies will still complete the year at levels higher than current.

Weekly calendar:
05/11/2020, Monday
ANZ New Zealand Business Confidence Index for May.

05/12/2020, Tuesday
April Consumer Price Index (MoM);
Core Consumer Price Index for April (MoM).

05/13/2020, Wednesday
Interest rate for May;
RBNZ Monetary Policy Statement;
New Zealand Interest Rate Decision;
Preliminary GDP (q/q);
Fed Chair Powell Speaks.

05/14/2020, Thursday
April employment change;
April unemployment rate;
Annual budget data;
BOE Gov Bailey Speaks;
BOC Governor Poloz Speaks.

05/15/2020, Friday
German GDP (q/q);
April Core Retail Index;
Retail Sales (MoM) for April.

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[Fibo_Group_Forex_Broker]

US-China Trade War - Part 2

China stated that both sides should implement the first phase of a trade agreement with equality and mutual respect.

The Chinese Foreign Ministry offers conciliatory tones for a trade deal, because the first phase of a trade deal is beneficial for China, the United States and the whole world.

This is certainly good news for the financial markets, as it reduces risks for the global economy. As a result, we are witnessing a weakening of JPY throughout the entire market, but traders and investors are still reacting with restraint, because a similar response from the United States is needed to strengthen optimism.

The appearance of any additional information on the reconciliation of the parties and their readiness to reach trade agreements will help strengthen stock indices and restore commodity asset prices.

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[Fibo_Group_Forex_Broker]

Stagnation of the UK economy

In March, Britain’s GDP fell by 5.8%, with a projected decrease of 7.9%.
As a result, UK GDP for the first quarter of this year fell by 2.0% against the forecast of -2.6%, which led to the appearance of negative values in the annual report of -1.6%. Since the actual data turned out to be noticeably better than predicted, the activity of GBP sellers remains moderate. Moreover, the current report can be perceived as moderately positive, which may support the GBP in the medium term.
We remind you that the quarterly report does not take into account the data for April, so in the second quarter the data may turn out to be much worse than the current ones - a bearish fundamental factor for GBP.

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[Fibo_Group_Forex_Broker]

The Fed will use the tools "fully"

Fed Chairman Jerome Powell spoke for the Peterson Institute today, saying he was ready to use all the monetary policy tools to the full extent, which put moderate pressure on the USD. Such a statement could put incredibly strong pressure on the USD. But in response to a question about negative rates, the head of the Federal Reserve reassured markets by saying that all FOMC members did not find this tool attractive.
Keeping the main interest rate above the zero mark is a bullish signal for the USD, which may deter it from developing a more powerful decline.

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[Fibo_Group_Forex_Broker]

RBNZ: Preparing for negative interest rates

The RBNZ held a meeting on Wednesday morning, and although no significant policy changes were expected, they nevertheless presented a worthy surprise to traders:

• #QE Doubling Asset Buyback Program. An increase in the program for the acquisition of large assets (LSAP-government bonds and local government bonds) to $60 billion from $33 billion.
• The regulator gave a signal of readiness for a further reduction in rates in the area of negative values. A possible decrease to minus 0.5% in November.
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  The combination of these factors will put pressure on #NZDUSD in the future. However, if the economy improves, we will see that this scenario is canceled and that will contribute to rapid growth. It is too early to make strategic decisions, we recommend considering a shorter-term trading in this currency pair.
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[Fibo_Group_Forex_Broker]

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.

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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[Fibo_Group_Forex_Broker]

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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[Fibo_Group_Forex_Broker]

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.

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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[Fibo_Group_Forex_Broker]

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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[Fibo_Group_Forex_Broker]

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.

Weekly calendar:
05/18/2020, Monday
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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