Americans unprecedentedly saved in April, and that isn’t good
April data on US personal spending and income showed a very wary mood of the Americans. A recent publication notes income growth by 10.5% in April (vs -7% expected) after a decrease of 2.2% in March. But the rate of outlays cut doubled to 13.6% after 6.9% a month earlier.
The share of savings to disposable income reached an unprecedented 33%
It is positive that revenues showed a sharp increase, and did not collapse, as was expected, despite the drop in employment. This remains the hope of a recovery in demand. It is alarming that the US population is unprecedentedly saving, which portends a prolonged economic downturn amid cost-cutting.
April data on US personal spending and income showed a very wary mood of the Americans. A recent publication notes income growth by 10.5% in April (vs -7% expected) after a decrease of 2.2% in March. But the rate of outlays cut doubled to 13.6% after 6.9% a month earlier.
The share of savings to disposable income reached an unprecedented 33%
It is positive that revenues showed a sharp increase, and did not collapse, as was expected, despite the drop in employment. This remains the hope of a recovery in demand. It is alarming that the US population is unprecedentedly saving, which portends a prolonged economic downturn amid cost-cutting.
• USDJPY reversed from resistance area
• Likely to fall to 106.80
#WaveAnalysis
https://fxpro.news/market-snapshots/usdjpy-wave-analysis-29-may-2020-20200529/
• Likely to fall to 106.80
#WaveAnalysis
https://fxpro.news/market-snapshots/usdjpy-wave-analysis-29-may-2020-20200529/
• Gold reversed from support level 1695.00
• Likely to rise to 1766.13
#WaveAnalysis
https://fxpro.news/market-snapshots/gold-wave-analysis-29-may-2020-20200529/
• Likely to rise to 1766.13
#WaveAnalysis
https://fxpro.news/market-snapshots/gold-wave-analysis-29-may-2020-20200529/
• Silver broke resistance level 17.50
• Likely to rise to 18.90
#WaveAnalysis
https://fxpro.news/market-snapshots/silver-wave-analysis-29-may-2020-20200529/
• Likely to rise to 18.90
#WaveAnalysis
https://fxpro.news/market-snapshots/silver-wave-analysis-29-may-2020-20200529/
Over the last day, 108.8K new cases of COVID-19 were detected worldwide vs 124.1K and 125.5K on the previous two days and 96.5K a week ago. For the first time in global data, the number of recovered (109.5K) exceeded the number of new cases. The total number of cases is 6.27M, of which 3.05M is active, 2.85M recovered, and 374K died. The five countries with the highest daily growth are the US (20.4K), Brazil (16.4K), Russia (9.3K), Peru (8.8K), India (8.8K). Daily death has stabilized as the decline in Europe, and the US is offset by growth in South America and India.
Oil is back in the spotlight
Brent and WTI have returned to their mid-March levels at last month’s close and are rising cautiously at the start of trading on Monday. Brent is trading close to $38, and WTI overcame $35 amid talks for OPEC+ extension cuts.
Meanwhile, US drilling activity down despite some rebound of the price. Despite the historically low number of active US rigs (only 301, including 222 oil-producing), the demand shock of the previous months may well cause an even deeper and longer decline.
Also, it is worth paying attention to the new jump in crude stockpiles last week by eight mln barrels, despite the expected recovery in demand. At the same time, production continues to decline after reaching 11.4 mln barrels per day.
Brent and WTI have returned to their mid-March levels at last month’s close and are rising cautiously at the start of trading on Monday. Brent is trading close to $38, and WTI overcame $35 amid talks for OPEC+ extension cuts.
Meanwhile, US drilling activity down despite some rebound of the price. Despite the historically low number of active US rigs (only 301, including 222 oil-producing), the demand shock of the previous months may well cause an even deeper and longer decline.
Also, it is worth paying attention to the new jump in crude stockpiles last week by eight mln barrels, despite the expected recovery in demand. At the same time, production continues to decline after reaching 11.4 mln barrels per day.
Crypto-decompression is over
During the month, Bitcoin has been trying to break the global downtrend and exceed the $10,000 threshold, but the highs within these rebounds are getting lower each time. There is a feeling that the market is teasing buyers.
In the meantime, the network hash rate has started to rise again. This has been facilitated by the end of a drought in the Chinese province with high mining capacity. In addition, we can talk about the end of the “decompression period” after halving. It is expected that the weak players have left, the strong ones have become stronger and the least ineffective ASICs were turned off. These adjustments have resulted in the price of bitcoin, according to JP Morgan’s estimates, approaching its internal value, although from 2019 it was significantly higher.
During the month, Bitcoin has been trying to break the global downtrend and exceed the $10,000 threshold, but the highs within these rebounds are getting lower each time. There is a feeling that the market is teasing buyers.
In the meantime, the network hash rate has started to rise again. This has been facilitated by the end of a drought in the Chinese province with high mining capacity. In addition, we can talk about the end of the “decompression period” after halving. It is expected that the weak players have left, the strong ones have become stronger and the least ineffective ASICs were turned off. These adjustments have resulted in the price of bitcoin, according to JP Morgan’s estimates, approaching its internal value, although from 2019 it was significantly higher.
• USDCHF reversed from support level 0.9600
• Likely to rise to 0.9800
#WaveAnalysis
https://fxpro.news/market-snapshots/usdchf-wave-analysis-1-june-2020-20200601/
• Likely to rise to 0.9800
#WaveAnalysis
https://fxpro.news/market-snapshots/usdchf-wave-analysis-1-june-2020-20200601/
• AUDUSD broke resistance level 0.6670
• Likely to rise to 0.6850
#WaveAnalysis
https://fxpro.news/market-snapshots/audusd-wave-analysis-1-june-2020-20200601/
• Likely to rise to 0.6850
#WaveAnalysis
https://fxpro.news/market-snapshots/audusd-wave-analysis-1-june-2020-20200601/
• Platinum reversed from support zone
• Likely to rise to 940.00
#WaveAnalysis
https://fxpro.news/market-snapshots/platinum-wave-analysis-1-june-2020-20200601/
• Likely to rise to 940.00
#WaveAnalysis
https://fxpro.news/market-snapshots/platinum-wave-analysis-1-june-2020-20200601/
Over the last day, 103.9K new cases of COVID-19 were detected worldwide vs 108.1K day earlier and 89.8K a week ago. The number of recovered was 56.4K (109.5K). The total number of cases is 6.37M, of which 3.09M is active, 2.9M recovered, and 377.6K died. The five countries with the highest daily growth are the US (22.2K), Brazil (14.6K), Russia (9.0K), India (7.8K), Peru (5.6K). In terms of the number of new deaths per day, Brazil is comparable to the US, with approximately 730 cases last day, and at the end of last week this figure exceeded 1000, but it seems to have declined.
Market greed is closer to saturation
US public companies have sold new shares for $60 billion in May. Even more actively they raising money through debt markets, attracting more than $1 trillion so far this year.
The central banks became almost the largest buyers of assets in the markets at the moment. For example, the Bank of Japan bought up about 80% of local ETFs. The Fed bought $2.8 trillion worth of securities in less than three months. But there is a limit to these purchases, as we can hardly expect central banks to be the only holders of private assets.
Last week the Fed’s balance sheet rose by $60B against $103B and $213B in the previous two weeks. The launch of the new program in early May started with big purchases, but now it is losing momentum.
So there are reasons to believe that demand for risks on the markets is limited, and the saturation point is very close.
US public companies have sold new shares for $60 billion in May. Even more actively they raising money through debt markets, attracting more than $1 trillion so far this year.
The central banks became almost the largest buyers of assets in the markets at the moment. For example, the Bank of Japan bought up about 80% of local ETFs. The Fed bought $2.8 trillion worth of securities in less than three months. But there is a limit to these purchases, as we can hardly expect central banks to be the only holders of private assets.
Last week the Fed’s balance sheet rose by $60B against $103B and $213B in the previous two weeks. The launch of the new program in early May started with big purchases, but now it is losing momentum.
So there are reasons to believe that demand for risks on the markets is limited, and the saturation point is very close.
AUDUSD rallies as a sign of market optimism
This week its growth snowballing with Monday gains exceeded 2% and another 0.8% so far on Tuesday.
The pair ultimately played the March collapse to 18-year lows at the end of May and is trading near 0.6850, the highest level since January.
AUDUSD exceeded its 200-day average by the start of the month, which was an important signal for the prevalence of bullish sentiment.
On the other hand, as the pair reached the overbought level by RSI, it makes it vulnerable to corrective pullback on signs of a rally stop.
This week its growth snowballing with Monday gains exceeded 2% and another 0.8% so far on Tuesday.
The pair ultimately played the March collapse to 18-year lows at the end of May and is trading near 0.6850, the highest level since January.
AUDUSD exceeded its 200-day average by the start of the month, which was an important signal for the prevalence of bullish sentiment.
On the other hand, as the pair reached the overbought level by RSI, it makes it vulnerable to corrective pullback on signs of a rally stop.
Over the last day, 115.2K new cases of COVID-19 were detected worldwide vs 103.9K day earlier and 92.3K a week ago. The number of recovered was 107.2K (56.5K). The total number of cases is 6.45M, of which 3.00M is active, 3.07M recovered, and 382.5K died. The five countries with the highest daily growth are Brazil (27.2K), the US (21.9K), Russia (8.9K), India (8.8K), Peru (4.8K). Along with the increase in new cases, the number of patients in serious and critical condition has also raised.
• EURUSD broke resistance zone
• Likely to rise to 1.1300
#WaveAnalysis
https://fxpro.news/market-snapshots/eurusd-wave-analysis-2-june-2020-20200602/
• Likely to rise to 1.1300
#WaveAnalysis
https://fxpro.news/market-snapshots/eurusd-wave-analysis-2-june-2020-20200602/
• CADJPY broke resistance zone
• Likely to rise to 81.00
#WaveAnalysis
https://fxpro.news/market-snapshots/cadjpy-wave-analysis-2-june-2020-20200602/
• Likely to rise to 81.00
#WaveAnalysis
https://fxpro.news/market-snapshots/cadjpy-wave-analysis-2-june-2020-20200602/
A healthy USD decline?
With a few exceptions, weakening of the U.S. currency is a normal state of healthy markets, which makes one believe that this trend will continue.
The markets are optimistic, suggesting a V-shaped economic recovery as we can see on the charts of stock indices and AUDUSD pair and 2-years trend reversal for EURUSD.
Currencies of large emerging countries follow the suite: the RUB jumped by 12% over two months, while ZAR – by 10%.
We saw the same thing earlier this year when the S&P 500 climbed to new heights in January amid a burgeoning epidemiological disaster. The same can be said about the currency market, where technical indicators show that the dollar is oversold compared to a vast number of currencies from AUD, EUR and CAD to RUB and ZAR.
With a few exceptions, weakening of the U.S. currency is a normal state of healthy markets, which makes one believe that this trend will continue.
The markets are optimistic, suggesting a V-shaped economic recovery as we can see on the charts of stock indices and AUDUSD pair and 2-years trend reversal for EURUSD.
Currencies of large emerging countries follow the suite: the RUB jumped by 12% over two months, while ZAR – by 10%.
We saw the same thing earlier this year when the S&P 500 climbed to new heights in January amid a burgeoning epidemiological disaster. The same can be said about the currency market, where technical indicators show that the dollar is oversold compared to a vast number of currencies from AUD, EUR and CAD to RUB and ZAR.
Germany still losing jobs despite softer lockdown
German Employment data for May again emphasized that the labour market remains under pressure, despite a business activity indicators turn to the growth and a notable relaxation of quarantine restrictions. In May, unemployment increased by another 238K after a jump of 372K a month earlier. The unemployment rate rose to 6.3%, the highest level in five years.
Compared to the United States (even with the correction that Germany has four times fewer people), the situation looks sharply better, according to which we often hear about the loss of 40 million jobs in three months. But in economics, one series is often compared to itself. And here is an alarming situation.
Germany's labour market has got new 310K unemployed for seven months to June 2009, and that year GDP fell by 5.6%. Now in two months, the growth of the unemployed is almost twice as big.
German Employment data for May again emphasized that the labour market remains under pressure, despite a business activity indicators turn to the growth and a notable relaxation of quarantine restrictions. In May, unemployment increased by another 238K after a jump of 372K a month earlier. The unemployment rate rose to 6.3%, the highest level in five years.
Compared to the United States (even with the correction that Germany has four times fewer people), the situation looks sharply better, according to which we often hear about the loss of 40 million jobs in three months. But in economics, one series is often compared to itself. And here is an alarming situation.
Germany's labour market has got new 310K unemployed for seven months to June 2009, and that year GDP fell by 5.6%. Now in two months, the growth of the unemployed is almost twice as big.
ADP paint brighter US jobs picture ahead of NFP
The ADP reported a drop in US private sector employment by 2.76M in May (vs -9.00M expected). According to this estimate, the total jobs number fell below 107M and is already below the lowest point after the global financial crisis.
Separation by industry noted the largest decline in trade and transportation services (-826K) and manufacturing (-719K).
For global demand for risky assets, it is positive that the overall decline is significantly smaller than expected. It is also worth considering that this report contains data before May 12th. It is consistent with the estimated period for Friday’s official NFP statistics. Still, it may turn out to be significantly worse than the real picture as in the second half of May many states seriously relaxed coronavirus restrictions.
The ADP reported a drop in US private sector employment by 2.76M in May (vs -9.00M expected). According to this estimate, the total jobs number fell below 107M and is already below the lowest point after the global financial crisis.
Separation by industry noted the largest decline in trade and transportation services (-826K) and manufacturing (-719K).
For global demand for risky assets, it is positive that the overall decline is significantly smaller than expected. It is also worth considering that this report contains data before May 12th. It is consistent with the estimated period for Friday’s official NFP statistics. Still, it may turn out to be significantly worse than the real picture as in the second half of May many states seriously relaxed coronavirus restrictions.
Over the last day, 121.4K new cases of COVID-19 were detected worldwide vs 115.2K day earlier and 106.5K a week ago. The number of recovered was 153.7K (107.2K). The total number of cases is 6.57M, of which 3.01M is active, 3.17M recovered, and 388.0K died. The five countries with the highest daily growth are Brazil (27.3K), the US (20.6K), India (9.6K), Russia (8.5K), Chile (4.9K). Over the week, the share of the US has declined from 30.2% to 28.9%, Spain - from 4.9% to 4.37%, the UK - from 4.61% to 4.26%. The share of Brazil increased from 7.16% to 8.89%, Russia - from 6.40% to 6.58%, India - from 2.74% to 3.3%.