Fibogroup Market Analysis 2020

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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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
 
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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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.
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Weekly calendar:
05/11/2020, Monday

ANZ New Zealand Business Confidence Index for May.

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

05/13/2020, Wednesday

Australia's Interest rate for May;
RBNZ Monetary Policy Statement;
New Zealand Interest Rate Decision;
UK Preliminary GDP (q/q);
Fed Chair Powell Speaks.

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

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