High market optimism makes growth fragile
The difference between expectations and facts drives markets. Recently, market participants’ expectations look very optimistic, which increases the fragility of growth. Firstly, stock buyers are impressed by relatively strong employment in Europe and the US. But it continues to decline at a pace that exceeds the worst moments of the global financial crisis, despite the lifting of restrictions.
In Europe, market participants are preparing for more support from the ECB later today. These plans for the easing of the central bank’s policy, as well as massive and rapid programs to help businesses in Europe, are already virtually priced in the stock index quotations. However, Europe has repeatedly delayed the launch of plans due to internal disagreements and bureaucracy.
Often, the currency market is alarmed a little bit earlier than the stock market. And in the morning we are witnessing the dollar strengthening against a wide range of currencies.
The difference between expectations and facts drives markets. Recently, market participants’ expectations look very optimistic, which increases the fragility of growth. Firstly, stock buyers are impressed by relatively strong employment in Europe and the US. But it continues to decline at a pace that exceeds the worst moments of the global financial crisis, despite the lifting of restrictions.
In Europe, market participants are preparing for more support from the ECB later today. These plans for the easing of the central bank’s policy, as well as massive and rapid programs to help businesses in Europe, are already virtually priced in the stock index quotations. However, Europe has repeatedly delayed the launch of plans due to internal disagreements and bureaucracy.
Often, the currency market is alarmed a little bit earlier than the stock market. And in the morning we are witnessing the dollar strengthening against a wide range of currencies.
AUDNZD reversed from key resistance zone
Likely to fall to 1.0700
#WaveAnalysis
https://fxpro.news/market-snapshots/audnzd-wave-analysis-3-june-2020-20200603/
Likely to fall to 1.0700
#WaveAnalysis
https://fxpro.news/market-snapshots/audnzd-wave-analysis-3-june-2020-20200603/
Attractive Ethereum
Ethereum (ETH) has grown by almost 20% over the week, and the technical picture is very favourable for the leading altcoin. The Ethereum has been trading around highs since February, bouncing back from global lows around $80 in March.
The WhaleAlert channel showed a withdrawal of 700,000 ETH from the Bithumb exchange. The ETH deficit is created naturally by keeping coins in decentralised financial applications, but the whales can help this process by withdrawing their assets from circulation.
Also, Glassnode found out that the blockchain showed the maximum number of active coins for three months. The number of wallets with a balance greater than 10 ETH is at a historic high ($275 million), while the number of wallets with a non-zero balance is increasing.
Ethereum (ETH) has grown by almost 20% over the week, and the technical picture is very favourable for the leading altcoin. The Ethereum has been trading around highs since February, bouncing back from global lows around $80 in March.
The WhaleAlert channel showed a withdrawal of 700,000 ETH from the Bithumb exchange. The ETH deficit is created naturally by keeping coins in decentralised financial applications, but the whales can help this process by withdrawing their assets from circulation.
Also, Glassnode found out that the blockchain showed the maximum number of active coins for three months. The number of wallets with a balance greater than 10 ETH is at a historic high ($275 million), while the number of wallets with a non-zero balance is increasing.
ECB boosts EUR for now but hurts its potential
The ECB has expanded the package of support measures by 600B euro (750B expected) to 1350B. The remaining parameters of the monetary policy are unchanged.
This release returned the euro to growth. EURUSD jumped from 1.1200 to 1.1270. The single currency is growing against the dollar for the 9th day in a row, adding 3.7% during this time.
Interesting that the EURUSD dynamics are very similar to the movements of 2008/09, but in a much more compressed form: what took weeks then, now only took days. Both then and now, risk aversion has caused pressure on EURUSD. The recovery of EURUSD then continued until the end of 2009, until the first signs of debt problems in Greece, which undermined confidence in the euro.
The ECB has expanded the package of support measures by 600B euro (750B expected) to 1350B. The remaining parameters of the monetary policy are unchanged.
This release returned the euro to growth. EURUSD jumped from 1.1200 to 1.1270. The single currency is growing against the dollar for the 9th day in a row, adding 3.7% during this time.
Interesting that the EURUSD dynamics are very similar to the movements of 2008/09, but in a much more compressed form: what took weeks then, now only took days. Both then and now, risk aversion has caused pressure on EURUSD. The recovery of EURUSD then continued until the end of 2009, until the first signs of debt problems in Greece, which undermined confidence in the euro.
Rally of world markets stopped on Thursday in anticipation of new signals. Separately, many factors may put pressure on the British pound. We see signs of slipping negotiations between the EU and Britain on the parameters of Brexit.
Moreover, friction between China and the UK has intensified. All these factors were in the game before but did not prevent the pound from growing against the dollar. However, buyers' alertness increased the price to 1.2600, an important short-term resistance level. Touching this mark caused GBPUSD to reverse in April and May.
It is possible that we see only a slight respite, and the markets will soon be able to brush aside alarming macroeconomic data and regression in trade negotiations. But, in our opinion, the chances of a corrective rollback or slipping of both global markets and the British currency are much higher.
Moreover, friction between China and the UK has intensified. All these factors were in the game before but did not prevent the pound from growing against the dollar. However, buyers' alertness increased the price to 1.2600, an important short-term resistance level. Touching this mark caused GBPUSD to reverse in April and May.
It is possible that we see only a slight respite, and the markets will soon be able to brush aside alarming macroeconomic data and regression in trade negotiations. But, in our opinion, the chances of a corrective rollback or slipping of both global markets and the British currency are much higher.
American Express broke round resistance level 100,00
Likely to rise to 108,700
#WaveAnalysis
https://fxpro.news/market-snapshots/american-express-wave-analysis-4-june-2020-20200604/
Likely to rise to 108,700
#WaveAnalysis
https://fxpro.news/market-snapshots/american-express-wave-analysis-4-june-2020-20200604/
Soy broke resistance level 860.00
Likely to rise to 870.00 and 890.00
#WaveAnalysis
https://fxpro.news/market-snapshots/soy-wave-analysis-4-june-2020-20200604/
Likely to rise to 870.00 and 890.00
#WaveAnalysis
https://fxpro.news/market-snapshots/soy-wave-analysis-4-june-2020-20200604/
Over the last day, 129.9K new cases of COVID-19 were detected worldwide vs 121.4K day earlier and 116.3K a week ago. The number of recovered was 80.3 (153.7K). The total number of cases is 6.70M, of which 3.06M is active, 3.25M recovered, and 393.2K died. The five countries with the highest daily growth are Brazil (31.9K), the US (22.7K), India (9.9K), Russia (8.8K), Pakistan (4.8K). Stringent quarantine measures in India were not enough to contain the spread. Globally, the number of closed cases is 54.4%, exceeding half this week. The proportion of deaths also continues to decline.
Where’s oil going?
After a short stalling earlier this week, the oil managed to return to growth, once again overcoming the important round level of $40 per barrel of Brent. On a wave of optimism, Brent quotes may return to $45, offsetting the decline of the price during the wars between Russia and Saudi Arabia in March. However, further on, the overhang of huge reserves and economic contraction promise to become an insurmountable obstacle to the growth of prices.
This time Russia and Saudi Arabia were fierce supporters of meeting quotas and jointly promoted the idea of extending the period of lowest oil production by 1-2 months.
In addition to the unity of the two leaders of OPEC+, oil was also helped by the U.S. data. They showed a decline in drilling activity and a drop in production. American production continues to decline, dropping last week to 11.2 mln bpd, the lowest level since October 2018.
After a short stalling earlier this week, the oil managed to return to growth, once again overcoming the important round level of $40 per barrel of Brent. On a wave of optimism, Brent quotes may return to $45, offsetting the decline of the price during the wars between Russia and Saudi Arabia in March. However, further on, the overhang of huge reserves and economic contraction promise to become an insurmountable obstacle to the growth of prices.
This time Russia and Saudi Arabia were fierce supporters of meeting quotas and jointly promoted the idea of extending the period of lowest oil production by 1-2 months.
In addition to the unity of the two leaders of OPEC+, oil was also helped by the U.S. data. They showed a decline in drilling activity and a drop in production. American production continues to decline, dropping last week to 11.2 mln bpd, the lowest level since October 2018.
An unexpected increase in US jobs!
US BLS reported that the economy created 2.5 million new jobs in May, that sharply contrasts with the expected slump by 7.5 million. This massive gap between expectations and fact shows how much the economic analysts underestimate how fast the economy can turn from contraction. We saw the same in China earlier in March.
The return to normal must occur not only in the number of people receiving a wage. The participation rate jumped, while average weekly hours reached a record 34.7. Even a drop in average earnings is a good sign as it reflects the return to work of low-paid employees.
America turns back to a more normal life. But the question remains, will it come to living fully in the coming months? Now the US employment is 19.5 million or 13% below the February peak. The total weekly payrolls are 10% lower than height, which is temporarily offset by checks from Trump and various programs. But most of these measures are short-term, if not just one-time.
US BLS reported that the economy created 2.5 million new jobs in May, that sharply contrasts with the expected slump by 7.5 million. This massive gap between expectations and fact shows how much the economic analysts underestimate how fast the economy can turn from contraction. We saw the same in China earlier in March.
The return to normal must occur not only in the number of people receiving a wage. The participation rate jumped, while average weekly hours reached a record 34.7. Even a drop in average earnings is a good sign as it reflects the return to work of low-paid employees.
America turns back to a more normal life. But the question remains, will it come to living fully in the coming months? Now the US employment is 19.5 million or 13% below the February peak. The total weekly payrolls are 10% lower than height, which is temporarily offset by checks from Trump and various programs. But most of these measures are short-term, if not just one-time.
The number of active cases of COVID-19 continues to increase due to the accelerated spread in developing countries. Over the last day, 113.0K new cases were detected worldwide vs 128.7K and 130.6K over the previous days. The number of recovered was 48.6K vs 76.3K and 78.6K earlier. The total number of cases exceeded 7M, of which 3.22M is active, 3.46M recovered, and 406.2K died. The five countries with the highest daily growth are the US (18.9K), Brazil (18.4K), India (10.8K), Russia (9.0K), Chile (6.5K). The 7-day moving average of daily deaths has returned to growth.
Before the Fed decision, markets may become more cautious
EURUSD dropped to 1.1280, losing 100 points from Friday’s highs after the 4.7% rally in the previous two weeks. The RSI indicator is retreating from the overbought area, which often signals a correction rollback. Since February 2019, the pair has reversed several times from levels near 1.1400, that is another sign in favour of correcting pullback.
The Australian dollar is testing 0.7000, but on Friday and earlier today, it faced an increase in sales there.
USDCAD closed early March gap and fell to 1.3400.
Quite possible that up to the Fed’s rate decision, the markets may be dominated by a corrective mood, as investors will close some positions after the previous rally and wait for further policy signals. At the end of last week, chances for the rate increase in June began to grow. So far, the probability of this is modest 9.3%. However, it is an essential signal that markets do not expect negative rates.
EURUSD dropped to 1.1280, losing 100 points from Friday’s highs after the 4.7% rally in the previous two weeks. The RSI indicator is retreating from the overbought area, which often signals a correction rollback. Since February 2019, the pair has reversed several times from levels near 1.1400, that is another sign in favour of correcting pullback.
The Australian dollar is testing 0.7000, but on Friday and earlier today, it faced an increase in sales there.
USDCAD closed early March gap and fell to 1.3400.
Quite possible that up to the Fed’s rate decision, the markets may be dominated by a corrective mood, as investors will close some positions after the previous rally and wait for further policy signals. At the end of last week, chances for the rate increase in June began to grow. So far, the probability of this is modest 9.3%. However, it is an essential signal that markets do not expect negative rates.
Bitcoin is trying to break through the glass ceiling
Bitcoin kept relatively calm on the weekend, showing a rather narrow price range of $9,500-$9,750 during the last day. At the same time, it is possible to note a rather significant growth of trading volumes by 37% to $26 bln.
The charts clearly show that the upward trend is gaining strength. However, for the time being, the price bumps into the glass ceiling at 10K, as the miners sell their assets.
Selling bitcoins by miners looks like a temporary price pressure factor.
Bitcoin kept relatively calm on the weekend, showing a rather narrow price range of $9,500-$9,750 during the last day. At the same time, it is possible to note a rather significant growth of trading volumes by 37% to $26 bln.
The charts clearly show that the upward trend is gaining strength. However, for the time being, the price bumps into the glass ceiling at 10K, as the miners sell their assets.
Selling bitcoins by miners looks like a temporary price pressure factor.
OPEC + ramping up Oil production, the US may follow
OPEC + over the weekend agreed to extend the period of the lowest quotas for another month. This news pushed Oil price by 3.5% on Monday to $43.30 for Brent, and above $40 for WTI, the highest since March 6.
However, during the day, optimism of buyers faded somewhat, as incoming news noted increased competition between manufacturers.
It must be said that so far, the weekly data on the number of operating rigs in the USA have noted a further decline. On Friday, Baker Hughes reported a drop of working oil rigs to 206, more and more approaching the 2009 lows (176). The total number (oil + gas) has been rewriting historical lows every week for a month and a half, reaching 284.
OPEC + over the weekend agreed to extend the period of the lowest quotas for another month. This news pushed Oil price by 3.5% on Monday to $43.30 for Brent, and above $40 for WTI, the highest since March 6.
However, during the day, optimism of buyers faded somewhat, as incoming news noted increased competition between manufacturers.
It must be said that so far, the weekly data on the number of operating rigs in the USA have noted a further decline. On Friday, Baker Hughes reported a drop of working oil rigs to 206, more and more approaching the 2009 lows (176). The total number (oil + gas) has been rewriting historical lows every week for a month and a half, reaching 284.
#NZDUSD broke resistance area
Likely to rise to 0.6640
https://fxpro.news/market-snapshots/nzdusd-wave-analysis-8-june-2020-20200608/
Likely to rise to 0.6640
https://fxpro.news/market-snapshots/nzdusd-wave-analysis-8-june-2020-20200608/
Copper (#CUU) broke key resistance level 250.00
Likely to rise to 262.00
https://fxpro.news/market-snapshots/copper-wave-analysis-8-june-2020-20200608/
Likely to rise to 262.00
https://fxpro.news/market-snapshots/copper-wave-analysis-8-june-2020-20200608/
Over the last day, 107.3K new cases of COVID-19 were detected worldwide vs 113.4K day earlier and 104.6K one week ago. The number of recovered was 75.3K vs 48.6K earlier. The total number of cases exceeded 7.2M, of which 3.25M is active, 3.54M recovered, and 408.7K died. The five countries with the highest daily growth are the US (19.0K), Brazil (18.9K), Russia (9.0K), India (8.4K), Pakistan (4.7K). Besides Brazil, India is showing an accelerating in contagion. Nevertheless, mortality in India is still noticeably lower than European and American, accounting for only 5% of closed cases and 2.8% of all known cases.
Markets jump on the weakest sectors
The US employment report shifted the attention of market participants to previously most beaten sectors. The stocks of the social distance beneficiaries – Amazon, Microsoft, and Apple are updating or close to their historic highs. However, the real rally on Friday and Monday was in Aviation and Banking sectors.
Boeing took off by 25% and Airbus shares spiked by 13.7% above Thursday close. Rolls-Royce, an aircraft engine maker, climbed by 23.3% during the same period.
The banking sector in June has a positive sentiment compared to the market as a whole, as the worst fears on the labour market did not realize, which reduced the risks of a wave of delays and defaults on loans.
The market euphoria risks switching US politics into “election mode”. They have previously demonstrated cohesion in approving stimulus packages. However, now they can start to pursue their interests: Democrats are in favour of support of the people, while Republicans prefer to help businesses.
The US employment report shifted the attention of market participants to previously most beaten sectors. The stocks of the social distance beneficiaries – Amazon, Microsoft, and Apple are updating or close to their historic highs. However, the real rally on Friday and Monday was in Aviation and Banking sectors.
Boeing took off by 25% and Airbus shares spiked by 13.7% above Thursday close. Rolls-Royce, an aircraft engine maker, climbed by 23.3% during the same period.
The banking sector in June has a positive sentiment compared to the market as a whole, as the worst fears on the labour market did not realize, which reduced the risks of a wave of delays and defaults on loans.
The market euphoria risks switching US politics into “election mode”. They have previously demonstrated cohesion in approving stimulus packages. However, now they can start to pursue their interests: Democrats are in favour of support of the people, while Republicans prefer to help businesses.