CFD Markets News and Forecasts — 04-03-2020

FXStreet reports that analysts at TD Securities note the Bank of Canada (BoC) cut rates by 50 bps today, which represents a downside shock relative to market expectations.

“The Bank of Canada cut rates by 50bps at the March policy meeting, opting for a more proactive approach relative to a forecasting community that was divided between a 25bp or 50bp cut.” 

“We continue to look for another 25bp cut in April. Additionally, we think the odds favour an additional 25bp rate cut in June.”

“We think USD/CAD is unlikely to mark new ground. Things should settle ahead of the recent highs of 1.3465, especially as we expect another Fed cut at the March meeting.”

The U.S. Energy Information Administration (EIA) revealed on Wednesday that crude inventories increased by 0.785 million barrels in the week ended February 28. Economists had forecast an advance of 2.644 million barrels.

At the same time, gasoline stocks declined by 4.340 million barrels, while analysts had expected a drop of 2.095 million barrels. Distillate stocks fell by 4.008 million barrels, while analysts had forecast a decrease of 1.928 million barrels.

Meanwhile, oil production in the U.S. rose by 100,000 barrels a day to 13.1000 million barrels a day.

The Institute for Supply Management (ISM) reported on Wednesday its non-manufacturing index (NMI) came in at 57.3 in February, which was 1.8 percentage points higher than the January reading of 55.5 percent. This pointed to the biggest expansion in the services sector in a year.

Economists forecast the index to drop to 54.9 last month. A reading above 50 signals expansion, while a reading below 50 indicates contraction.

Of the 18 manufacturing industries, 16 reported growth last month, the ISM said, adding that most respondents are concerned about the coronavirus and its supply chain impact but remain positive about business conditions and the overall economy.

According to the report, the ISM's New Orders gauge climbed 6.9 percentage points to 63.1 percent in February from the reading of 56.2 percent in January. The Employment indicator rose 2.5 percentage points in February to 55.6 percent from the January reading of 53.1 percent. The Supplier Deliveries increased to 52.42 percent; up 0.7 percentage point from 51.7 percent in January. The Inventories surged 7.4 percentage points in February to 53.9 percent from the January reading of 46.5 percent. Meanwhile, the ISM's non-manufacturing business activity measure fell 3.1 percentage points to 57.8 percent from the January reading of 60.9 percent. The Prices index came in at 50.8, 4.7 percentage points lower than the January's 55.5 percent.

The Bank of Canada (BoC) lowered its target for the overnight rate by 50 basis points to 1.25 percent on Wednesday, while economists had expected a 25-basis point-cut.

In its policy statement, the Canadian central bank noted that the "COVID-19 virus is a material negative shock to the Canadian and global outlooks, and monetary and fiscal authorities are responding."

According to the BoC, the COVID-19 represents a significant health threat to people in a growing number of countries. "In consequence, business activity in some regions has fallen sharply and supply chains have been disrupted', it said, adding that this has pulled down commodity prices and the Canadian dollar has depreciated.

The Canadian central bank expects the global business and consumer confidence will deteriorate, further depressing activity, as the virus spreads.

For Canada, the Bank sees the first quarter of 2020 to be weaker than it had expected. "The drop in Canada's terms of trade, if sustained, will weigh on income growth," the BoC said. "Meanwhile, business investment does not appear to be recovering as was expected following positive trade policy developments".

It also promised to adjust monetary policy further if required to support economic growth and keep inflation on target. "While markets continue to function well, the Bank will continue to ensure that the Canadian financial system has sufficient liquidity", the BoC noted.

FXStreet reports that in the opinion of FX Strategists at UOB Group, USD/CNH could attempt to reach the 6.90 region in the next weeks.

24-hour view: “Our expectation for USD to trade sideways was wrong as it lurched lower and plummeted to an overnight low of 6.9375. Downward momentum has picked and from here, USD is expected to weaken further to 6.9250. Resistance is at 6.9500 but the stronger level is at 6.9700.”

Next 1-3 weeks: “We expected the ‘pullback in USD to extend to 6.9400’ on Monday (02 Mar, spot at 6.9770). The anticipated weakness occurred at a faster pace than anticipated as USD plummeted to an overnight low of 6.9375 yesterday. Downward has improved and from here, USD is expected to weaken further to 6.9000. On the upside, the ‘strong resistance’ level has moved to 6.9950 from 7.0100.”

• No question that virus is first issue we will face
• It's important that Carney laid out full tools that BoE has to tackle virus
• All focus is on monetary policy but reasonable to expect we will have to provide supply chain finance in the near future
• Will have to move fast to help small-and-medium sized firms

U.S. stock-index futures surged on Wednesday, rebounding from the previous session's steep selloff, triggered by the Fed's unscheduled 50 basis point rate cut, which raised deeper concerns related to the spread of the virus and its impact on the global economy.

Global Stocks:

(company / ticker / price / change ($/%) / volume)

Home Depot (HD) upgraded to Buy from Neutral at Nomura; target raised to $251

Alcoa (AA) upgraded to Neutral from Underperform at BofA/Merrill; target lowered to $15

Morgan Stanley (MS) upgraded to Buy from Neutral at Citigroup

FXStreet reports that FX Strategists at UOB Group do not rule out a move lower in USD/JPY, although a breach of 106.30 looks unlikely for the time being.

24-hour view: “The sudden and sharp drop in USD came as a surprise. Despite the relatively sharp decline, downward momentum has not improved by as much. However, the risk is clearly on the downside but for today, the 106.60 support could be strong enough to check any weakness in USD (there is another strong support at 106.30). On the upside, USD has to move back above 107.75 in order to indicate the current downside risk has dissipated (minor resistance is at 107.50).”

Next 1-3 weeks: “We expected ‘further USD weakness’ last Friday (28 Feb, spot at 109.50) but clearly did not anticipate the outsized plunge that led to a low of 107.49. Such large 1-day decline (the -1.38% drop last Friday is the largest in 33 months) is rare and while further weakness is not ruled out, the odds for a sustained drop below 106.30 are not high. Meanwhile, USD could continue to trade in a choppy manner over the next few days and only a move back above 110.00 (‘strong resistance’ level was at 110.45 last Friday) would indicate the current weakness has stabilized.”

The employment report prepared by Automatic Data Processing Inc. (ADP) and Moody's Analytics showed on Wednesday the U.S. private employers added 291,000 jobs in February.

Economists had expected a gain of 170,000.

The increase for January was revised down to 209,000 from the originally reported 291,000.

"The labor market remains firm, as private-sector payrolls continued to expand in February," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. "Job creation remained heavily concentrated in large companies, which continue to be the strongest performer."

Meanwhile, Mark Zandi, chief economist of Moody's Analytics, noted, "COVID-19 will need to break through the job market firewall if it is to do significant damage to the economy. The firewall has some cracks, but judging by the February employment gain it should be strong enough to weather most scenarios."

• Says Germany has all the strength to counter the impact of coronavirus if the epidemic plunged the world economy into a crisis
• Government is prepared and ready to act decisively to counter coronavirus

GBP traded mixed against other major currencies in the European session on Wednesday amid heightened expectations the Bank of England (BoE) could follow the U.S. Fed and make emergency rate cut in response to growing worries about the economic fallout from the coronavirus outbreak. While GBP strengthened against EUR and the safe-haven JPY and CHF, it fell against the rest of major rivals.

The Federal Reserve announced an unexpected half-percentage point interest rate cut on Tuesday. That was the first emergency rate cut since the global financial crisis of 2008, which also marked the biggest one-time cut since then. Fed's Chair Jerome Powell noted the U.S. economy remained strong but said it was difficult to predict the "magnitude and persistence" of the effects of the fast-spreading virus.

According to the CME BoEWatch Tool, money markets are now seeing 84% chance of a 25 basis point cut by the BoE on March 26, up from a probability of 80% prior to the Fed emergency cut. Meanwhile, almost two cuts are priced in by end-2020, compared with none a few weeks ago.

Market participants also received data from IHS Markit, which revealed that the UK's service sector growth slowed in February due to a negative impact on sales from the coronavirus outbreak. The IHS Markit/CIPS services purchasing managers' index (PMI) fell to 53.2 in February from 53.9 in January. Still, the latest reading was the second-highest since September 2018 amid receding political uncertainty and strong domestic economic conditions.

FXStreet reports that strategists at Standard Chartered Bank expect the reserve Bank of New Zealand (RBNZ) to cut the official cash rate by 25bps each in March and May as the dovish wave sweeping global central banks on coronavirus fears may pressure RBNZ to cut.

“We now see RBNZ cutting the official cash rate by 25bps each in March and May, versus our previous call of no change in 2020.”

“This change in our policy rate call is prompted by the likely coordinated global monetary policy easing following the meeting of G7 finance ministers and central bank governors, the fact that the coronavirus outbreak seems to be more widespread and protracted than previously expected and the start of the decline in inflation expectations and business confidence.”

“Furthermore, with elections this year, we expect fiscal stimulus to be more supportive of growth.”

“Yield differentials could turn more supportive for NZD-USD short-term. However, we expect the NZD to underperform G10 safe havens such as JPY and CHF, given concerns about the growth outlook and weak risk sentiment.”

FXStreet reports that analysts at Rabobank note the Bank of Canada (BoC) will announce its interest rate decision at 15:00 GMT and a 25bp cut is broadly expected.

“We expect the Bank of Canada to cut the policy rate 25bp to 1.50%. This marks a small shift given we have long expected the BoC to begin easing in April 2020.” 

“USD/CAD implied volatility was the lowest of any USD cross-currency year-to-date and over the course of the past 12 months but that recently changed as oil prices slumped on Covid-19 fears and rate expectations began to shift.”

“Indeed, the relationship between USD/CAD and oil has risen significantly of late and weakness in the black stuff helped to push USD/CAD out of its recent range as it broke 1.3330 and tested the 1.34 handle.”

“A close above 1.34 wasn’t followed by a subsequent higher close however and we are now back in the congestion zone of 1.33-1.34".

The Mortgage Bankers Association (MBA) reported on Wednesday the mortgage application volume in the U.S. surged 15.1 percent in the week ended February 28, following a 1.5 percent increase in the previous week. This was the biggest advance since the week ended January 10 this year.

According to the report, refinance applications climbed 26.0 percent, while applications to purchase a home fell 2.7 percent.

Meanwhile, the average fixed 30-year mortgage rate dropped to 3.57 percent from 3.73 percent.

"The 30-year fixed-rate mortgage dropped to its lowest level in more than seven years last week, amidst increasing concerns regarding the economic impact from the spread of the coronavirus, as well as the tremendous financial market volatility," said Mike Fratantoni, MBA's senior vice president and chief economist. "Given the further drop in Treasury rates this week, we expect refinance activity will increase even more until fears subside and rates stabilize."

U.S.: Some slippage expected in the ISM – TDS

FXStreet notes that the United States of America will release ADP Employment Change at 13.15 GMT and the Non-manufacturing ISM at 15:00 GMT. Analysts at TD Securities forecast the numbers expected.

“The non-manufacturing ISM index is unlikely to be as weak as the manufacturing index, or the Markit services PMI (49.4), but we expect some slippage, due in part to COVID-19 worries. We forecast a 1pt decline to 54.5 for February.”

“We expect the ADP private employment report to show a 170k increase for Feb.” 

“Lastly, the Beige Book will probably get more attention than usual given worries about COVID-19 although, as usual, its information value will be limited by the lack of numbers.”

FXStreet reports that while investors continue to digest Tuesday's surprise Fed rate cut and Super Tuesday results, TD Securities’ focus shifts to today's BoC policy decision. 

“TD looks for a 25bp rate cut from the Bank of Canada at the March policy meeting, in line with the market consensus, and think markets may be over-reaching with some looking for a dovish 50 bps move. This should still be enough to keep USD/CAD elevated.” 

“While expectations for a 50bp cut were helped by the Fed's emergency rate cut, we believe the Bank's concern over financial vulnerabilities and their data-dependent nature support cutting rates by just 25bps until the Bank has more insight towards the economic impact of COVID-19 in Canada.”

“We see potential for a move toward 1.35 but do not expect a break into any new territory unless the BoC flags it stands ready to take rates lower again in April.”

• Urges pushing forward major infrastructure projects
• Says virus control work shows positive signs
• Stresses on need to continue virus control in Hubei and Wuhan
• Says control and prevention tasks are still heavy in Hubei and Wuhan
• Calls for continued virus controls in major cities including Beijing

FXStreet reports that FX strategists at UOB Group suggest that cable is seen gathering extra downside traction in the next weeks, although a test of 1.2700 still remains unlikely.

24-hour view: “Instead of trading sideways, GBP edged to a high of 1.2844 before ending the day on a firm note at 1.2815. The improved underlying tone suggests GBP could continue to edge higher towards 1.2860. For today, the strong resistance at 1.2900 is not expected to come into the picture. On the downside, only a move below 1.2770 would indicate the current mild upward pressure has eased (minor support is at 1.2800).”

Next 1-3 weeks: “While we indicated last Friday that a ‘NY close below 1.2820 would suggest GBP is ready to embark of a sustained decline’, we were of the view ‘the prospect for such a scenario is low for now’. However, GBP sliced through 1.2820 and plunged to a 4-1/2 -month low of 1.2726 before snapping back up to end the day at 1.2821 (-0.48%). The break of 1.2820 has exposed the downside in GBP even though 1.2700 is a strong support and may not come into the picture so soon. To look at it another way, GBP could consolidate for a couple of days first before making a run for 1.2700. On the upside, only a move above 1.2900 (‘strong resistance’ level) would indicate that GBP is not ready to move lower just yet.”

• We have capacity to cut rates one more time; beyond that we will have to consider QE
• I don't think negative interest rates are something that would be contemplating
• Estimates that Australia's services exports would fall by 10% in Q1
• Drop in services exports due to coronavirus would cut about 0.5% of GDP in Q1
• Still thinks that monetary policy is effective

FXStreet reports that PMIs illustrate the severity of disturbances caused by Covid-19 crisis as the car sector is hit by extended post-LNY lockdowns. Economists at ABN Amro adjust Chinese growth forecasts a bit further down.

"We expect China's PMIs to improve sharply again in the coming months, as production capacity will be restored."

"The corona crisis is also preventing a rebound in the car sector, which has been one of the drags to Chinese growth last year. The sharp drop in production and sales in January can be partly attributed to the Chinese New Year holiday break. However, the extended post LNY-lockdowns and other draconian measures taken will hit production and sales even more."

"The central bank also announced to lower bank RRRs further: after reducing them by 400 bp in 2018-19 and 50 bp (to 12.5%) in January 2020, we expect another 150 bp in RRR cuts in the course of this year."

"We expect the Chinese authorities to continue with these policies to cushion the blow from the headwinds created by the corona crisis."

"We still assume that the disruptions from the corona crisis will prove temporary, and that economic activity will normalise in the course of March. We now foresee negative qoq growth in Q1, still followed by a clear pick-up in quarterly growth in subsequent quarters."

"We have revised our annual growth forecast for 2020 a bit further down, to 5.3% (from 5.5%; and down from 5.8% pre-corona crisis). Reflecting spillover effects from a stronger second half of the year, we have revised our 2021 growth forecast a bit higher, to 6.0% (from 5.8%; and up from 5.6% pre-corona crisis)."

CNBC reports that the European Central Bank (ECB) and the Bank of England are expected to announce stimulus measures in the coming days, after the Federal Reserve surprised global markets with a large rate cut.

"The ECB will almost certainly try to intervene," Florian Hense, European economist at Berenberg bank said Wednesday.

Data released Tuesday showed euro zone inflation hitting a three-month low in February. This is a crucial data point for the ECB, whose primary mandate is to react to price changes.

The ECB is due to meet next week, but some analysts have not ruled out an earlier decision in Frankfurt, as Powell did Tuesday in the United States.

Some market watchers are expecting a rate cut of 10 basis points in the euro zone and changes to bank lending. However, ECB President Christine Lagarde could also announce additional measures.

"The ECB could introduce a special facility targeting SMEs (small and medium enterprises) hit by the crisis with looser terms and conditions than other open-market operations," Frederik Ducrozet, senior economist at Pictet Wealth Management, said.

The Bank of England (BOE) is also due to meet later this month, but analysts at Nomura are predicting an emergency rate cut this week.

"We have, therefore, adjusted our view to ... an emergency 25bp (basis point) rate cut this week allowing the Bank time to formulate a plan for more targeted easing at the end of the month," two Nomura economists said Tuesday in reaction to the Fed's announcement.

The outgoing governor of the BOE, Mark Carney, said Tuesday that the coronavirus could produce a "large" but temporary hit to the British economy. He had also said previously that the virus is already denting tourism and manufacturing in the U.K.

FXStreet reports that economists at ABN Amro have downgraded their economic growth forecasts further given the spread of the coronavirus around the world. The three firsts quarter of the year are set to be hit.

"We now see even more weakness in global economic growth in the first half of this year and to a lesser extent in the third quarter. This should be followed by a strong rebound in the fourth quarter and the start of next year."

We will likely see global GDP growth somewhat below the IMF's 2.5% threshold for recession for the year as a whole, though the period of weakness will be relatively short-lived.

"The US flirts with recession, while the eurozone experiences a modest technical recession in our updated scenario."

According to the report from Eurostat, in January 2020 compared with December 2019, the seasonally adjusted volume of retail trade increased by 0.6% in the euro area (EA19) and by 0.5% in the EU27. In December 2019, the retail trade volume decreased by 1.1% in the euro area and by 1.0% in the EU27.

In January 2020 compared with January 2019, the calendar adjusted retail sales index increased by 1.7% in the euro area and by 2.1% in the EU27.

In the euro area in January 2020, compared with December 2019, the volume of retail trade increased by 1.9% for automotive fuels, by 0.7% for food, drinks and tobacco and by 0.4% for non-food products. In the EU27, the volume of retail trade increased by 1.9% for automotive fuels, by 0.7% for food, drinks and tobacco and by 0.3% for non food products.

In the euro area in January 2020, compared with January 2019, the volume of retail trade increased by 2.4% for non-food products and by 0.7% for both automotive fuel and food, drinks and tobacco. In the EU27, the retail trade volume increased by 3.2% for non-food products, by 0.9% for food, drinks and tobacco and by 0.8% for automotive fuel.

According to the report from IHS Markit/CIPS, UK service providers recorded another increase in business activity and incoming new work during February, which added to signs of a rebound in customer demand since the general election at the end of last year. Survey respondents often commented on greater willingness to spend and the release of new projects that had been delayed in the run up to Brexit. However, the latest survey indicated that business activity, new orders and employment all rose at slower rates than in January. There were a number of reports citing a negative impact on sales from the coronavirus outbreak, particularly to clients in overseas markets. The loss of momentum for incoming new business also contributed to the sharpest drop in backlogs of work since last September.

Adjusted for seasonal influences, the headline UK Services PMI Business Activity Index registered 53.2 in February, to remain above the crucial 50.0 no-change value for the second month running. The latest reading was down from 53.9 in January, but still the second highest since September 2018. Companies reporting an upturn in business activity widely commented on a boost from receding political uncertainty and strong domestic economic conditions.

Total volumes of new work increased for the third month running in February, but the rate of expansion eased since the start of 2020. The main headwind to growth cited by service providers was the impact of the coronavirus outbreak, through cancellations of bookings and delays to new projects among clients in Asia. Reflecting this, latest data pointed to a renewed fall in total new orders from abroad, although the rate of decline was less marked than seen in the final quarter of 2019.

Adjusted for seasonal influences, the IHS Markit/CIPS UK Composite Output Index posted 53.0 in February, down only slightly from a 16 month high of 53.3 in January. The latest reading signalled a further solid expansion of private sector output and was only fractionally weaker than the earlier 'flash' estimate (53.3 in February).

According to the report from IHS Markit, the Eurozone PMI Composite Output Index was unchanged on the earlier flash reading in February, recording a level of 51.6. That was an improvement on January's 51.3 and signalled the strongest expansion of the euro area's private sector economy in six months.

Slightly stronger growth was supported by a solid and firmer gain in service sector activity, alongside a weaker contraction of manufacturing production. Although goods producers recorded a fall in output for a thirteenth successive month, the degree to which production fell was the weakest since May 2019.

Levels of new business received by euro area private sector companies increased for a third month in succession. Growth, however, remained modest, undermined by an ongoing contraction in exports. Indeed, latest data showed a seventeenth successive monthly fall in new work from abroad.

In line with the trend since November 2014, staffing levels continued to rise. However, the latest rate of growth was modest, and unchanged since the previous month. Moreover, whilst gains in employment were seen across the region, rates of growth varied, ranging from a negligible rise in Germany to marked gains in France.

Meanwhile, prices data indicated another solid rise of average input costs. Inflation was again mainly driven by rising employment expenses in the services economy as manufacturers registered another reduction in their input costs. Firms did, however, struggle to pass on increased prices to their clients. Although output charges continued to rise, they again did so only modestly.

Business confidence regarding future activity was a little lower than January's 16-month high during February. There were reports from across the region of worries over the impact on business from an escalation of the Covid-19 outbreak. German companies remained the least optimistic, whilst those in Ireland were the most confident.

CNBC reports that growth in the euro zone is likely to be very sluggish over the next decade, experts have warned, and the forecasts were bleak even before the new coronavirus hit the region.

"Even before the coronavirus outbreak, dark clouds had been gathering over the euro zone economy, with Italy in the eye of the storm," economists at ING warned.

"Over the next 10 years, the region's potential growth rate will likely slow to a crawl while Italy faces a stagnation far worse than anything Japan has seen," ING's Carsten Brzeski, Bert Colijn and Inga Fechner said in a note.

In the fourth quarter of 2019 euro zone growth was just 0.1% quarter-on-quarter, marking its slowest growth rate since 2013.

Looking ahead, economists fear that the region is looking at a decade of meager growth expectations at best. "In the next 10 years, demographic and structural headwinds, and a limited appetite for reform, could push the bloc's potential growth rate to less than 1%, down from the annual average pace of 1.4% of the previous decade," ING's economists said.

In the fall, the European Commission had forecast 1.2% growth for the euro zone in 2020 and 2021, and 1.4% for the entire European Union (excluding the U.K.).

But now the outbreak of the flu-like virus is certain to dent growth forecasts in the region in the short term, economists say, and will force the European Central Bank (ECB) to act.

"We suspect that the (ECB's) forecast for (euro zone) GDP growth in 2020 will be reduced from 1.1% to around 0.8%, with the projections for Germany and Italy likely to be cut particularly sharply. Forecasts for 2021 may also be reduced," he added.

Capital Economics had forecast sluggish growth for the euro zone anyway in 2020, but has downgraded these. "Even before the coronavirus hit, we were expecting GDP growth of only 0.7% in the euro zone this year. We have already revised this down to 0.5%."

eFXdata reports that Credit Agricole CIB Research discusses the latest reading from its long-term fair-value models and points that the pair is still very undervalued around current levels.

"The G10 VALFeX long-term fair value for EUR/USD hit 1.24 at the end of 2019 (from 1.23 in Q319) - its highest level since 2017. This reflected wider real EUR-USD rate and yield spreads as well as an improvement of the Eurozone's external imbalances relative to the US. In turn, this makes the EUR the second most undervalued G10 currency at present, after the NOK," CACIB notes.

"It is also worth highlighting that the EUR is the most undervalued G10 currency when using purchasing power parity (PPP) to determine the currencies' long-term fair value. Indeed, according to PPP, EUR/USD should have been at 1.4000 at the end of 2019 - a new record high," CACIB adds.

During today's Asian trading, the US dollar rose against the euro and the yen after significantly weakening the day before on the back of an emergency interest rate cut by the Federal reserve.

The Fed reduced the interest rate by 0.5 percentage points to 1-1. 25% per annum. The last time the Fed made an emergency rate cut between scheduled meetings was during the 2008 financial crisis.

Experts expect an increase in the volatility of currency trading on the background of the ongoing us election campaign.

Information that former US Vice President Joe Biden is winning at least eight States in the democratic primaries on "Duper Tuesday", ahead of his main rival Bernie Sanders, pushed up us stock index futures and supported the dollar. "It is believed that Biden's position as a candidate for President of the United States, carries the least serious changes for financial markets, - said the chief investment officer of First American Trust, Jerry Braakman. "Sanders offers a lot of changes that markets don't always like."

According to the report from Federal Statistical Office, the consumer price index (CPI) increased by 0.1% in February 2020 compared with the previous month, reaching 101.6 points (December 2015 = 100). Economists had expected a 0.2% increase.

Inflation was -0.1% compared with the same month of the previous year. Economists had expected a 0.1% increase.

The 0.1% increase compared with the previous month can be explained by several factors including rising prices for air transport. International package holidays also recorded an increase, as did clothing and footwear due to the end of the seasonal sales. In contrast, prices for heating oil and hotel accommodation decreased.

In February 2020, the Swiss Harmonised Index of Consumer Prices (HICP) stood at 100.70 points (base 2015=100). This corresponds to a rate of change of -0.1% compared with the previous month and of -0.2% compared with the same month the previous year. The HICP is a supplementary indicator for inflation based on a harmonised method across EU member countries. It enables inflation in Switzerland to be compared with that of European countries.

According to provisional data from Destatis, turnover in retail trade in January 2020 was in real terms 1.8% and in nominal terms 3.0% larger than in January 2019. The number of days open for sale was 26 in January 2020 and in January 2019. Economists had expected a 1.5% increase in real terms.

The retail trade of food, beverages and tobacco in January 2020 was 1.0% real and 3.2% more nominal than in January 2019. Sales at supermarkets, hypermarkets and hypermarkets were 0.9% higher in real terms and 2.9% higher in nominal terms than in the same month of the previous year. In the corresponding comparison, specialist food retailing increased by 2.1% in real terms and 5.1% in nominal terms.

Non-food retail sales in January 2020 increased by 2.2% in real terms and 2.8% in nominal terms compared to the same month of the previous year. The Internet and mail order business achieved the largest increase in sales with 6.3% in real terms and 6.4% in nominal terms.

When adjusted for calendar and seasonal variations, the January 2020 turnover was in real terms 0.9% and in nominal terms 1.2% higher than in December 2019.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1238 (6412)

$1.1214 (3549)

$1.1200 (5180)

Price at time of writing this review: $1.1149

Support levels (open interest**, contracts):

$1.1123 (3473)

$1.1086 (3710)

$1.1043 (2624)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date March, 6 is 126646 contracts (according to data from March, 3) with the maximum number of contracts with strike price $1,1200 (6412);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3004 (2029)

$1.2957 (1126)

$1.2914 (477)

Price at time of writing this review: $1.2812

Support levels (open interest**, contracts):

$1.2763 (3353)

$1.2730 (2536)

$1.2689 (1054)

Comments:

- Overall open interest on the CALL options with the expiration date March, 6 is 27236 contracts, with the maximum number of contracts with strike price $1,3050 (3702);

- Overall open interest on the PUT options with the expiration date March, 6 is 28397 contracts, with the maximum number of contracts with strike price $1,2800 (3353);

- The ratio of PUT/CALL was 1.04 versus 1.06 from the previous trading day according to data from March, 3

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.