junho 18, 2021

Market News

Fri Apr 17 2020 16:44:31 GMT-0400 (Horário Padrão do Amazonas)

EUR/USD Price Analysis: Euro gets Friday bounce, ends the week near 1.0870 level
  • EUR/USD bounces on Friday and remains confined within range. 
  • Immediate resistance can emerge near 1.0845 and 1.0920 levels. 

EUR/USD daily chart 

 EUR/USD is trading below the main SMAs on the daily chart as the spot rebounds modestly before reaching the 1.0800 figure.   

EUR/USD four-hour chart

The fiber is trading below the main SMAs on the four-hour chart suggesting a bearish bias in the medium term. However, the quote bounced near the 1.0800 figure and challenged the 1.0884 resistance. A daily close above the mentioned level can yield further strength towards the 1.0920 and 1.0970 resistance levels, according to the Technical Confluences Indicator. On the flip side, immediate support can be expected near the 1.0845 and 1.0820 levels 

Resistance: 1.0884, 1.0920, 1.0970Support: 1.0845, 1.0820, 1.0800

Additional key levels

Fri Apr 17 2020 16:04:18 GMT-0400 (Horário Padrão do Amazonas)

US Dollar Index Price Analysis: DXY on track to end the week below the 100.00 mark
  • US dollar index (DXY) ends the week mixed below the 100.00 mark.
  • The level to beat for bulls is the 100 resistance. 

DXY daily chart

 DXY is trading above the main SMAs on the daily chart on track to end the week below the 100.00 mark.  

DXY four-hour chart

 DXY retreats within range while trading above the main SMAs on the four-hour chart. The bull trend remains intact suggesting that next week the greenback can have a retest of the 100 figure with the potential of a break above it opening the door to further advances toward the 100.50 and 101.00 price levels. Support is expected to hold near 99.60, 99.25 and 98.85 levels.  

Additional key levels

Fri Apr 17 2020 15:20:08 GMT-0400 (Horário Padrão do Amazonas)

US and Canada: Key data for next week – NFB

Analysts at the National Bank of Canada take a look at next’s week key economic numbers to be released in Canada and in the US. 

Key Quotes:

“In Canadaa lot of attention will be on March’s consumer price index. A sharp drop in gasoline prices (-19%) during the month could have translated into a 0.4% decline of the headline index before seasonal adjustment (-0.6% after seasonal adjustment). This weak monthly print should lead to a sharp drop in the annual inflation rate, from 2.2% to 1.1% (a negative base effect will also play a role in that decline). We expect the annual rate of CPI-common to remain unchanged at 1.8%. We’ll also get February’s retail sales report. Auto sales may have fell a bit in the month following a strong showing in January, but this decline may have been more than offset by gains in other categories, notably gasoline stations (on account of rising pump prices) and electronics. As such, we expect total sales to have increased 0.2%. Outlays on items other than motor vehicles, for their part, may have grown a more convincing 0.4%. We’ll also keep an eye on the release of wholesale trade sales for February.”

“In the US, the first effects of the coronavirus will certainly be visible in a host of March indicators due to be released this week. Sales of newly-built and existing homes surely retreated in the month but we’ll probably have to wait until April’s data become available to get a better sense of the damage being done in the real estate sector. Durable goods orders, meanwhile, will have suffered badly judging from previously-released indicators such as the Empire and Philly Fed surveys and the ISM Manufacturing Index. In other news, Markit’s flash composite PMI will probably show one of the sharpest (if not the sharpest) monthly drop in private-sector activity in April. As has been the case in recent weeks, the publication of data on initial jobless claims (a timely indicator of the labour market) will attract a lot of attention.”Fri Apr 17 2020 14:50:28 GMT-0400 (Horário Padrão do Amazonas)

USD/JPY: 110 still seen as short-term ceiling – Danske Bank

According to analysts from Danske Bank, the USD/JPY PY have been thrown back and forth by moves in global risk aversion, commodities and domestic fiscal response on the one side (stronger JPY), but also a very weak domestic economy and recently a global stabilisation in risk sentiment (weaker JPY). Looking ahead, they see the second half of the year as the time when USD/JPY could move slightly higher as they expect an economic rebound during the fourth quarter. 

Key Quotes: 

“Our PPP estimate is around 80, i.e. suggesting an undervalued JPY, while our medium term valuation model (MEVA) stands at 108. In our view, USD/JPY is at fair value.”

“Drivers set to take JPY above 110 are likely to relate to a further stabilisation of the business cycle. Events that could take JPY towards 105 again include declining commodity prices, or further deterioration of expectations to global demand. The key event to take USD/JPY lower would likely be a substantial widening of credit spreads, a correction in US equity markets or re-emerging fears related to shutdowns and coronavirus.”

“We continue to expect 112 in 6M and 12M (unchanged), which still reflects our view of a strong USD. EUR/JPY has started to struggle in recent month(s), driven primarily on the back of a declining EUR. This may indeed continue to be the case in the coming months. Near term, we see USD/JPY as trading in 107-110 range.”
 Fri Apr 17 2020 14:21:17 GMT-0400 (Horário Padrão do Amazonas)

Global economy to contract 2.9% in 2020 – Wells Fargo

Analysts at Wells Fargo look for the global economy to contract 2.9% in 2020. They point out the key source of concern for the global economy has shifted to the services sector.    

Key Quotes: 

“The key source of concern for the global economy has shifted to the services sector from the manufacturing sector. One of the most notable themes of 2019 was a relatively solid consumer and services sector (helped by solid employment and wage growth not only in the U.S., but also other major economies including the Eurozone, United Kingdom and Canada, among others). In contrast, industrial output was under pressure for large parts of last year, with persistent global trade tensions weighing on activity.”

“Given the extent of the economic shocks, we now see the global economy entering recession in the first half of this year and expect global GDP to contract by 2.9% in 2020, though we do expect global markets and economic activity to stabilize by late this year.”

“With most major and emerging economies set to fall into recession in 2020, monetary and fiscal policymakers have responded with aggressive stimulus measures. Despite these efforts, we doubt they will be enough to help these economies avoid a deep slump in growth in the near term.”

“Policy responses are impressive and important, and are likely a contributing factor to some recovery in global equities from their recent lows, while they should also lead to an eventual  stabilization in global economic activity—both developments that are important for the currency market outlook. However, given the size of the COVID-19 virus shock we think it is very unlikely these policy measures will be enough to help these economies avoid a sharp contraction in the near-term. As a result we have made some further significant downward revisions to our international growth outlook and now see 2020 GDP declines of 5.5% for the Eurozone, 5.4% for Japan, 4.9% for the United Kingdom and 5.7% for Canada.Fri Apr 17 2020 14:08:44 GMT-0400 (Horário Padrão do Amazonas)

USD/CAD: Loonie to strengthen if economy improves – Danske Bank

According to analysts from Danske Bank, the USD/CAD pair will move to the downside over the next months. They forecast it will trade at 1.37 in six months (revised higher from 1.35). 

Key Quotes: 

“Given the oil heavy nature of the Canadian economy, CAD has – like other oil currencies – been heavily hit by the double whammy of both COVID-19 and the oil price war. COVID-19 figures show similarities to the US and have improved recently, but risks are for a larger economic setback than previously assumed. Bank of Canada (BoC) has reacted strongly by cutting rates by 150bp to a level that the central bank deems the lower boundary.”

“The BoC has also launched asset purchase programs in government, provincial and corporate bonds. Looking forward, the CAD’s direction will be determined by how fast both the global economy gets up and running, and by how oil prices, products and global asset markets recover. In our base case, we pencil in a stronger CAD. According to CFTC IMM data, speculative CAD positioning remains borderline stretched short.”

“We forecast USD/CAD at 1.40 in 1M (from 1.43), 1.38 (unchanged) in 3M, 1.37 in 6M (1.35) and 1.35 in 12M (1.28).”Fri Apr 17 2020 13:46:21 GMT-0400 (Horário Padrão do Amazonas)

EUR/USD Price Analysis: Euro regains some poise, trades above 1.0850 level
  • EUR/USD rebounds and approaches the 1.0900 figure on USD weakness. 
  • Immediate resistance is seen near 1.0845 and 1.0920 levels. 

EUR/USD daily chart 

 EUR/USD is trading below the main SMAs on the daily chart as the spot stays within familiar ranges seen in March and February.  

EUR/USD four-hour chart

 The fiber is trading below its main SMAs on the four-hour chart suggesting a negative bias in the medium term. However the spot is rebounding from near the 1.0800 figure and is now challenging the 1.0884 resistance at press time. A daily close above this level can lead to further advances towards the 1.0920 and 1.0970 resistance levels, according to the Technical Confluences Indicator. Meanwhile, immediate support can be expected near the 1.0845 and 1.0820 levels 

Resistance: 1.0884, 1.0920, 1.0970Support: 1.0845, 1.0820, 1.0800

Additional key levels

Fri Apr 17 2020 13:17:04 GMT-0400 (Horário Padrão do Amazonas)

USD/JPY rebounds above 107.50, looks to end week in red
  • Dow Jones Industrial Average gains nearly 2% on Friday.
  • US Dollar Index remains on track to close week below 100.
  • CB Leading Economic Index for US declined to 104.2 in March.

The USD/JPY pair dropped to a daily low of 107.31 during the early trading hours of the American session but staged a modest rebound in the last hour. As of writing, the pair was down 0.33% on a daily basis at 107.58 despite the upbeat market mood. For the week, the pair is down around 80 pips.

USD weakness caps the pair’s rebound

Earlier in the day, the data published by The Conference Board revealed that the Leading Economic Index for the US fell by 6.7 points to 104.2 in March to post its biggest monthly decline. Commenting on the data, “the unprecedented and sudden deterioration was broad based, with the largest negative contributions coming from initial claims for unemployment insurance and stock prices,” said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board.

Despite the disappointing data, Wall Street’s main indexes extended the rebound on Friday boosted by revived hopes of the US economy moving closer to reopening and Remdesivir being used as a treatment for COVID-19 symptoms. At the moment, the Dow Jones Industrial Average and the S&P 500 are both up around 2% on the day while the Nasdaq Composite is underperforming by adding 0.15%. 

Meanwhile, after posting decisive gains in the last two days and climbing above the 100 handle, the US Dollar Index (DXY) lost its traction on Friday to make it difficult for the pair to gather recovery momentum. Although the DXY remains in the negative territory near 99.75 on the daily chart, it remains on track to register modest weekly gains.

Technical levels to watch for

Fri Apr 17 2020 12:41:26 GMT-0400 (Horário Padrão do Amazonas)

Oil Price Analysis: WTI trades in fresh 2020 lows, bearish
  • WTI bear trend remains intact as crude oil is printing fresh 2020 lows.
  • The level to beat for bears is the 17.92 support (current 2020 low).

WTI daily chart

 WTI is under strong selling pressure trading in multi-year lows and printing fresh 2020 lows this Friday. 

WTI four-hour chart

 WTI is trading below the main SMAs on the four-hour chart suggesting a bearish bias in the medium term. As WTI stays under strong selling pressure, a daily close below the 17.92 level (current 2020 low) would lead to further losses towards the 16.00 and 13.30 price levels. On the flip side, retracements up can find resistance near the 20.00 and 22.00 price levels. 

Additional key levels

Fri Apr 17 2020 12:26:18 GMT-0400 (Horário Padrão do Amazonas)

EUR/GBP: Pound remains fundamentally undervalued – Danske Bank

Analysts at Danske Bank forecast the EUR/GBP will trade at 0.90 in a three-month period. They explained that the United Kingdom runs a large current account deficit, which makes the pound vulnerable as capital flows faded at the height of the coronadriven risk sell-off. “While the imminent risk of more along these lines has faded, it keeps GBP at risk vs surplus-EUR in wake of a new wave of the virus.”

Key Quotes: 

“GBP remains fundamentally undervalued with a significant Brexit discount still attached. Our Brexit-corrected MEVA estimate for EUR/GBP is close to 0.83; PPP estimate around 0.76. Thus, if a trade deal with the EU is eventually sealed, a decent move lower should be in store.”

“The coronavirus initially proved to be a perfect storm for GBP, as BoE rate cuts, the UK’s handling of the spread of the virus and the sizeable current-account deficit weighed on GBP. Further, COVID-19 means both the EU and the UK have been preoccupied with issues other than Brexit trade agreement talks; this increases the risk of a big negative UK trade shock in 2021. While GBP has recovered somewhat as the fire sale of risk assets waned, it is difficult to see what can support GBP much further from here. We probably need to get rather close to the year-end deadline before a trade deal is landed.”

“We see EUR/GBP at 0.88 in 1M, 0.90 in 3M (previously 0.93) and 6M (0.90) followed by a move towards 0.86 on a trade deal in 12M (0.87).”Fri Apr 17 2020 11:52:37 GMT-0400 (Horário Padrão do Amazonas)

AUD/USD Price Analysis: Aussie holds on above 0.6300 figure, bullish
  • AUD/USD consolidates the bullish recovery while holding above 0.6300 figure. 
  • The level to beat for bulls is the 0.6400/0.6450 resistance zone. 

AUD/USD daily chart

 AUD/USD consolidates the massive bullish recovery while holding on above the 0.6300 figure near the 50 SMA on the daily chart.  

AUD/USD four-hour chart

  AUD/USD remains firmly bullish above its main SMAs while the market is making higher highs and higher lows. The spot could break above the 0.6400/0.6450 price zone opening the gates for further advances towards the 0.6600 price level on the way up. Support can emerge near the 0.6260 level followed by the 0.6200 and 0.6100 figures.  

Additional key levels

Fri Apr 17 2020 11:52:31 GMT-0400 (Horário Padrão do Amazonas)

NZD/USD rises to 0.6050 on US dollar weakness
  • Kiwi among top performers on Friday amid risk appetite.
  • US dollar falls across the board after reversing versus main European currencies and the yen.

The NZD/USD pair is rising on Friday but is still down for the week. It printed a fresh daily high at 0.6050 and as of writing it trades at 0.6030. 

Most of the gains were realised during the Asian session amid an improvement in market sentiment on the bank of hopeful results from the use of Gilead’s Remdesivir. More recently the US dollar bounced to the downside against main European currencies and boosted further NZD/USD. 

In Wall Street, the Dow Jones gains 1.70%, and the Nasdaq rises 0.70%. The Global Dow is up by 2.25%. Crude oil prices tumble 8.50%. US yields are back near Thursday’s lows, weighing on the USD. 

Technical outlook 

From a week ago, the kiwi is trading modestly lower, but it holds a bullish tone in the very short-term. On Thursday it bottomed at 0.5919, and since then it has been moving to the upside. 

On a wider perspective, the pair continues to show a consolidation with risks tilted to the upside. A consolidation above 0.6100 would likely clear the way to more gains. On the flip side, if it breaks and holds firm under 0.5940/60 (horizontal/20-day SMA), a test of 0.5840 (April low) would be on the radar. 
 

fxoriginal

Fri Apr 17 2020 11:46:44 GMT-0400 (Horário Padrão do Amazonas)

NY Fed’s GDP Nowcast for Q2 2020 plunges to -7.9%

The US economy is expected to contract by 7.9% in the second quarter of the year, the Federal Reserve Bank of New York’s latest Nowcasting Report showed on Friday. The GDP growth forecast for the first quarter slumped to -0.4%.

“News from this week’s data releases decreased the nowcast for 2020:Q1 by 1.9 percentage points and decreased the nowcast for 2020:Q2 by 7.5 percentage points,” the NY Fed noted in its press release. “Negative surprises from manufacturing, survey, and retail sales data drove the decrease.”

Market reaction

These figures were largely ignored by the market participants and Wall Street’s main indexes were last seen adding between 0.2% and 1.65%.Fri Apr 17 2020 11:39:48 GMT-0400 (Horário Padrão do Amazonas)

Gold struggles to recover above $1700 despite broad USD weakness
  • US Dollar Index stays in red below 100 on Friday.
  • Wall Street’s main indexes trade in the positive territory.
  • US: CB Leading Economic Index registers largest monthly drop in March.

The XAU/USD pair closed virtually unchanged at $1,715 on Thursday and came under strong bearish pressure on Friday as the upbeat market mood made it difficult for the safe-haven gold to find demand. Although the pair staged a technical rebound and climbed above the $1,700 mark in the early trading hours of the American session, it struggled to extend its recovery and was last seen down 1.5% on the day at $1,692.

Risk rally dominates markets on Friday

The upbeat mood on heightened hopes of Remdesivir being used to treat coronavirus symptoms and the US moving toward reopening the economy stays as the main market theme on Friday. 

After major Asian equity indexes finished the week on a strong footing, European stocks are posting decisive gains to reflect the risk-positive atmosphere. Additionally, Wall Street’s main indexes are adding more than 1% with the exception of the Nasdaq Composite.

On the other hand, the US Dollar Index is staying in the negative territory around 99.70 to suggest that the greenback is also suffering losses amid risk-on flows to keep the pair’s losses limited for the time being. The only data from the US on Friday revealed that the Conference Board’s Leading Economic Index declined by 6.7% in March to register its largest fall ever.

Technical levels to watch for

Fri Apr 17 2020 11:23:13 GMT-0400 (Horário Padrão do Amazonas)

Fed’s Bullard: Unlikely Fed would move to purchase equities

The upcoming FOMC meeting is the right time to review the impact of the Fed programs so far,  St. Louis Federal Reserve Bank President James Bullard said on Friday.

Additional takeaways

“Not expecting much on forward guidance at upcoming meeting; story right now is not about rates but about the virus.”

“Moral hazard would be a concern in normal times, but not during a pandemic.”

“The Fed’s aim is that if a company was in good standing in January, it will be able to be operating in the second half of the year.”

“One thing the Fed could do in next statement is emphasize that data right now is not meaningful.”

“No reason US cannot get past crisis mostly in Q2 and have a good economy in the second half.”

“Measures of liquidity in many markets are better now than a few weeks ago.”

“Unlikely the Fed would move to purchase equities, not sure it would have much impact anyway given size and liquidity of US market.”

“There is some deflation risk, but hard to know how to read inflation data given how many stores are closed.”

“The Fed still committed to 2% inflation target but those are debates for the future.”

“The Fed should be careful about next steps, reserve some firepower for clearly identified problems.”

“Federal government should simply foot production costs of any company able to make and sell tests.”

“Universal testing not just a health issue, also key for businesses, individuals and economic reopening.”

“Government support of production costs while allowing firms to sell them at a market price, would leave the country swimming in tests by second half of year.”

Market reaction

The US Dollar Index largely ignored these remarks and was last seen down 0.23% on the day at 99.70.Fri Apr 17 2020 11:14:57 GMT-0400 (Horário Padrão do Amazonas)

Nasdaq Price Analysis: Trading off 7-week highs around 8775 level
  • Nasdaq is up more than 61.8% since the coronavirus collapse.
  • The level to beat for bulls is the 9000 resistance. 

Nasdaq daily chart

 After the coronavirus-related crash, the Nasdaq is bouncing up sharply trading above the 61.8% Fibonacci retracement and above its main SMAs on the daily chart. 

Nasdaq four-hour chart

 The Nasdaq remains firmly bullish above its main SMAs on the four-hour time frame while making higher highs and higher lows suggesting that the recovery stays for now intact. The market is currently pulling back down failing to break above the 9000 round number. However, given the current strength, it seems reasonable to expect the bulls breaking this resistance sooner rather than later. Immediate support can be expected near the 8520 level.  

Additional key levels

Fri Apr 17 2020 10:50:06 GMT-0400 (Horário Padrão do Amazonas)

EUR/USD: Absence of unity depresses the shared currency

EUR/USD kicked off the post-Easter week with optimism about flatter coronavirus curves, but that gave way to losses as the economic damage became prominent. Additional health and financial figures are on the docket now, FXStreet’s analysts Yohay Elam reports.

Key quotes

“The absence of unity is felt on the political level and markets are taking note. The Eurogroup failed to agree on common bonds in a step that mostly hurt debt and disease-stricken Italy. That has weighed on the euro.”

“EU leaders will hold a videoconference on Thursday, trying to sort out a coordinated exit strategy and a recovery plan, where the clash over coronabonds will continue. The euro may suffer. If leaders commit to a package worth more than a trillion euros, perhaps that would help the common currency, but the chances are low.”

“US Weekly Unemployment Claims remain in the limelight, with growing weight for Continuing Claims. It will be interesting to see how many are already unable to return to work. Both numbers will likely be in the millions, pushing the four-week moving average higher.”Fri Apr 17 2020 10:42:21 GMT-0400 (Horário Padrão do Amazonas)

GBP/USD: Healing process for Boris and the pound

GBP/USD has hit the highest in a month amid PM Boris Johnson’s discharge from hospital and US dollar weakness. After the OBR published worrying scenarios and markets’volatile week, economic figures are eyed, FXStreet’s analyst Yohay Elam briefs.

Key quotes

“The longer the shuttering continues, the worse for the economy. The Office of Budget Responsibility has published a scenario in which GDP plunges by 35% in the second quarter and falls by a total of 13% in 2020. The IMF also released gloomy forecasts.”

“If Boris Johnson returns to addressing the press, his words will carry more weight than any of his peers in government.” 

“Health officials will probably urge extending the shelter-at-place orders while Trump is set to demand a return to normal. State governors, who have the authority, are expected to consider matters carefully and try to balance the economic impact and saving lives.”

“Existing Home Sales figures for March will be of some interest, but weekly Unemployment Claims, as well as Continuing Claims, will likely trigger a more significant reaction. Both numbers are forecast to remain in the millions.”Fri Apr 17 2020 10:32:28 GMT-0400 (Horário Padrão do Amazonas)

Poland: Murky QE – Rabobank

For the first time in its history, the National Bank of Poland has started purchasing government bonds, economists at Rabobank reports.

Key quotes

“Bloomberg reported that yesterday’s bond operation triggered more questions and speculation after the NBP bought PLN 30.6bn of notes. Traders contacted by Bloomberg said that such a substantial amount of bonds could not have been sold by commercial banks.”

“The lack of transparency is likely to create more questions and speculation that could undermine Poland’s opinion amongst foreign investors, who expect an equal playing field for all market participants.” 

“We remain of the view that QE as a monetary tool in its purest form of increasing the supply of money by purchasing bonds and other securities should not be seen as a major source of risk to the Polish zloty just yet.”

“What is a critical issue that may have a substantial impact on the zloty is that QE must not be used to consolidate power and to promote the model of the economy that favours those who are currently at the helm without consideration for the long-term outlook and structural changes that could lead to serious economic imbalances.”Fri Apr 17 2020 10:29:10 GMT-0400 (Horário Padrão do Amazonas)

USD/CHF flirting with daily lows, just above mid-0.9600s
  • USD/CHF struggled to preserve early modest gains and faced rejection near 100-day SMA.
  • Some intraday USD selling bias seemed to be the only factor exerting downward pressure.
  • The downfall of around 65 pips seemed unaffected by a strong rally in the equity markets.

The USD/CHF pair extended its intraday pullback from over one-week tops and refreshed daily lows, around the 0.9660 region in the last hour.

The pair failed to capitalize on its early uptick to the 0.9725 region, instead faced rejection near 100-day SMA and has now retreated around 60-65 pips from intraday highs amid intensifying selling pressure around the US dollar.

The latest optimism over the treatment for COVID-19 virus, combined with the US President Donald Trump’s plan for reopening the economy boosted investors confidence and prompted some USD long-unwinding trade.

The greenback was further weighed down by an intraday turnaround in the US Treasury bond yields. This coupled with possibilities of some technical selling below the 0.9700 mark seemed to have aggravated the intraday bearish pressure.

Meanwhile, the downtick seemed rather unaffected by a strong rally in the equity markets, which tends to undermine the Swiss franc’s safe-haven demand, albeit might turn out to be the only factor that might help limit deeper losses.

At current levels, the pair might be headed for a near flat closing for the week and form a Doji candlestick on the weekly chart, pointing to indecision among traders over the pair’s next leg of a directional move.

Technical levels to watch

Fri Apr 17 2020 10:27:45 GMT-0400 (Horário Padrão do Amazonas)

US Housing Sec. Carson: Remdesivir appears promising as treatment for COVID-19

Ben Carson, Secretary of the US Department of Housing and Urban Development, told Fox Business Network on Friday that Gilead’s Remdesivir appears promising as a potential treatment for COVID-19.

Earlier in the day, a University of Chicago hospital participating in an experimental study using Remdesivir to treat severe coronavirus patients said it was seeing rapid recovery in fever and respiratory symptoms.

Market reaction

After rising as much as 16% in premarket trading, Gilead Sciences, Inc (GILD) shares were last seen adding 8.3% on the day at $82.90.Fri Apr 17 2020 10:23:34 GMT-0400 (Horário Padrão do Amazonas)

Coronavirus: US dollar could benefit from a prolonged recovery

The right question to ask about the US economy is not how deep will be the GDP plunge but how long will the shutdown orders prevent recovery, in the opinion of FXStreet’s analyst Joseph Trevisani.

Key quotes

“There is no reason to assume that the economic logic of the deeper the recession the swifter the recovery rule is untrue for pandemics.”

“The motivation for everyone, employers, workers, managers and markets to reconstitute their lives and fortunes will prove again that individual effort is the strongest engine of economic growth.”

“US and China will want to get their economies moving as quickly as possible and that will only be possible if each side cooperates in fulfilling the agreement. There should be no new disputes on the trade front.”

“The safety-trade to the US dollar and assets started to fade as equity markets have recovered and governments in Germany and the United States among others are discussing plans for a gradual reopening of their economies. If those revivals take place the dollar will continue to slip as the safety advantage is extracted. It will be likely to be several months before normal economic and interest rate comparisons return to currencies.” Fri Apr 17 2020 10:10:49 GMT-0400 (Horário Padrão do Amazonas)

S&P 500 Price Analysis: US stocks trading in 5-week highs, bullish
  • S&P 500 index is trading in 5-week highs challenging the 50 SMA on the daily chart.
  • The bullish recovery stays intact as buyers overcame the 2800/2850 resistance zone.  

S&P 500 daily chart

 The S&P 500 remains firmly bullish making higher highs and higher lows as the buyers overcame the 2800/2850 resistance zone. The market remains biased to the upside with bulls setting their eyes on the 3000 round number. On the flip side, the 2800/2850 price zone is expected to act as support.    

Additional key levels 

Fri Apr 17 2020 10:07:15 GMT-0400 (Horário Padrão do Amazonas)

BoE’s Bailey: Large and small companies will need new equity

The UK banks must address the serious strain on their operational capacity for handling the surge in the loan demand, Bank of England Governor Bailey told reporters on Friday and noted that large and small companies will need new equity.

Additional takeaways

“The IMF sees a V-shaped recovery for the global economy but there is a huge amount of uncertainty.”

“Global policymakers in IMF meetings showed a very clear commitment to do what is necessary.”

“OBR’s scenario of 35% fall in UK GDP in Q2 is not implausible.”

“The MPC will set out its view very clearly in may on how much scarring the UK economy faces.”

“The UK government has not yet used its extended ways and means overdraft facility with the BoE, gilts market is pretty orderly.”

“Can’t say at this point how long the BoE will hold on to gilts it has bought.”

“Must avoid public sector policy decisions crowding out private sector investment when crisis eases.”

“The UK’s fiscal response to COVID-19 crisis may help banks in the next stress tests.”

Market reaction

The GBP/USD pair continues to cling to modest daily gains near the 1.2500 handle after these comments.Fri Apr 17 2020 10:00:44 GMT-0400 (Horário Padrão do Amazonas)

GBP/USD Price Analysis: Rebounds swiftly from weekly lows, retakes 1.2500 mark
  • GBP/USD continues to find decent support near the 1.2400 round-figure mark.
  • Bulls are likely to wait for a move beyond 100-day SMA, around 1.2525 area.

The GBP/USD pair quickly recovered around 100 pips from weekly lows and now seemed headed back towards the top end of its daily trading range.

The pair once again attracted some dip-buying near the 1.2400 round-figure mark, which should now act as a key pivotal point for short-term traders.

Any subsequent move up might confront stiff resistance near the 1.2525 region (100-hour SMA), which if cleared might be seen as a fresh trigger for bulls.

Meanwhile, technical indicators on the daily chart maintained their bullish bias and have again started gaining some positive traction on hourly charts.

The set-up supports prospects for an eventual break through the mentioned barrier and a possible move towards the 1.2575 intermediate hurdle en-route the 1.2600 mark.

Some follow-through buying has the potential to lift the pair back towards the weekly swing high, around mid-1.2600s, representing the very important 200-day SMA.

On the flip side, bears are likely to wait for a sustained break below the 1.2400 mark, below which the pair is likely to accelerate the slide further towards the 1.2340 support area.

The downward trajectory could further get extended even below the 1.2300 mark, towards testing the next major support near the 1.2230-25 horizontal zone.

GBP/USD 1-hourly chart

fxsoriginal

Technical levels to watch

Fri Apr 17 2020 09:54:54 GMT-0400 (Horário Padrão do Amazonas)

Fed’s Bullard: Fed can do much more on liquidity if needed

The Federal Reserve’s current programs are “standard moves” and do not amount to the monetary finance of the US government, St. Louis Federal Reserve Bank President James Bullard said on Friday. 

Bullard further added that the Fed could do much more on liquidity if needed.

Market reaction

The US Dollar Index, which tracks the USD’s value against a basket of six major currencies, extended its daily slide after these comments and was last seen erasing 0.25% on a daily basis at 99.67.Fri Apr 17 2020 09:51:43 GMT-0400 (Horário Padrão do Amazonas)

EUR/USD: Momentum remains to the downside

EUR/USD Friday’s four-hour chart is pointing to an advantage for the bears, as FXStreet’s analyst Yohay Elam notes.

Key quotes

“EUR/USD dropped below the uptrend support line that accompanied it since last week and also fell below the 50 and 100 Simple Moving Averages on the four-hour chart.”

“Some support awaits at 1.0840, which was a stepping stone for the pair on its way up. The weekly low of 1.0815 is the next level to watch.”

“Resistance is at 1.0930, which was a swing high last week. April’s peak of 1.0995 is the next up.”Fri Apr 17 2020 09:49:50 GMT-0400 (Horário Padrão do Amazonas)

Silver Price Analysis: XAG/USD consolidating advance near $15/oz
  • XAG/USD is consolidating gains above the $15.00 mark
  • The level to beat for buyers is the 15.80 resistance.

Silver daily chart

 After the dramatic fall to 2009 lows, silver is rebounding up as the Fed launched a limitless Quantitative Easing (QE). However, the metal stays below the main SMAs on the daily chart.   

Silver four-hour chart 

 XAG/USD recovery stays intact as silver is trading above its 100/200 SMAs on the four-hour chart making higher highs and higher lows. Bulls need a daily close above the 15.80 resistance to open the gates towards the 16.20 and 16.60 levels. Support can be expected near the 15.00, 14.50 and 14.00 levels.  

Resistance: 15.80, 16.20, 16.60Support: 15.00, 14.50, 14.00

Additional key levels

Fri Apr 17 2020 09:49:30 GMT-0400 (Horário Padrão do Amazonas)

Wall Street opens sharply higher as risk rally remains intact
  • S&P 500 Financials Index adds 4.5% to lead the rally.
  • CBOE Volatility Index drops more than 3% on Friday.
  • Energy shares rise sharply despite ongoing crude oil selloff.

Wall Street’s main indexes started the last day of the week decisively higher as the risk rally picked up momentum after US Pres. Trump unveiled the guideline to reopen the economy. Moreover, reports pointing out to patients responding positively to remdesivir treatment revived hopes of a return to normality.

Risk-on flows dominate financial markets

As of writing, the Dow Jones Industrial Average was up 2.2% on the day while the S&P 500 and the Nasdaq Composite were adding 2% and 0.65%, respectively. Reflecting the upbeat mood, the CBOE Volatility Index, Wall Street’s fear gauge, was down 3.1% on a daily basis.

All the major S&P 500 sectors post gains in the early trade on Friday with the Energy Index and the Financials Index both rising more than 4% to lead the rally. On the other hand, the Healthcare Index is the worst-performing sector despite advancing 0.9% on the day.Fri Apr 17 2020 09:47:18 GMT-0400 (Horário Padrão do Amazonas)

China: A historic contraction in Q1 – Standard Chartered

China’s economy contracted for the first time in over four decades due to the coronavirus-inflicted slowdown, per Standard Chartered Bank. USD/CNY is trading at 7.072.

Key quotes

“GDP contracted 6.8% y/y in Q1 versus growth of 6% in Q4 (Figure 1). However, economic activity improved in March, with the decline in industrial production narrowing to 1.1% y/y from 13.5% y/y in January-February.”

“We now expect quarterly GDP growth of 3.0% y/y in Q2-2020 (4% prior), 6.0% in Q3 (5%), and 6.1% in Q4 (5.5%). Our growth forecast for 2020 remains unchanged at 2.5%.”

“We upgrade our 2021 GDP growth forecast to 7.5% from 5.8% prior, as we estimate growth of 18% y/y in Q1-2021 due to favourable base effects.”

“We maintain our expectation for another 80bps of cuts in the reserve requirement ratio (RRR) in Q2-Q3, a 25bps cut to the benchmark deposit rate in Q2, and another 10bps cut in the medium-term lending facility (MLF) rate in Q3.”

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