CFD Markets News and Forecasts — 09-06-2020

• No evidence ECB bond-buying delayed economic reforms
• Lowering interest rates remain an option for future
• QE has slightly reduced wealth inequality in euro area
• Eurosystem holds about 9% of balance sheet in gold
• By focusing on the medium-term, we can adjust the speed of returning to our inflation aim
• ECB to consider pros, cons of price-level targeting
• ECB has no intention of abandoning cash
• ECB expects sizable take up of TLTTRO-III next week

• Likely to be great deal of pain for financial sector
• Another sharp repricing of risk is still possible but first stage of crisis is over
• UK could suffer more adverse outcomes than in BoE's May scenario

FXStreet reports that Jane Foley, Senior FX Strategist at Rabobank, has adjusted up the EUR/CHF forecast to 1.09 in three months and though she expects demand for the Swiss franc in six month, the 1.06 level offers solid support.

“We now see scope for a move towards 1.09 on a 3-month view, though we also expect another surge in safe-haven demand on a 6-month view which would provide renewed support for the CHF.”

“While Europe’s economy is currently in a poor state, the backdrop for the EUR has been boosted by the European Commission’s budget proposal which takes a step towards regional debt sharing.  In addition, the huge extension of the ECB’s PEPP suggests it is willing to do whatever it takes to chase away fears of fragmentation in the region. Although EUR/CHF hit a 5 year low close to 1.05 in May, these events in Europe suggest a break below this level is now far less likely.”

“While we do see scope for another rush towards safe-haven currencies on a 6-month view, assuming improved confidence in the EU/EMU is sustained, we would expect the 1.06/107 area to offer support.”

The Commerce Department announced on Tuesday the U.S. wholesale inventories rose 0.3 percent m-o-m in April instead of increasing 0.4 percent m-o-m as previously reported.

Economists had forecast the reading to stay unrevised at +0.4 percent m-o-m. In March, wholesale inventories fell by a revised 1.1 percent m-o-m (originally a drop of 1.0 percent m-o-m).

According to the report, Stocks of nondurable goods surged 1.1 percent m-o-m in April, while durable goods inventories dropped 0.3 percent m-o-m.

In y-o-y terms, wholesale inventories decreased 2.8 percent in April.

The Job Openings and Labor Turnover Survey (JOLTS) published by the Labor Department on Tuesday revealed a 16.1 percent m-o-m drop in the U.S. job openings in April after a revised 14.2 percent m-o-m decline in March (originally an 11.6 percent m-o-m decrease).

According to the report, employers posted 5.046 million job openings in April (the lowest level since December 2014) compared to the March figure of 6.011 million (revised from 6.191 million in original estimate) and economists’ expectations of 5.000 million. The job openings rate was 3.7 percent in April, down from a revised 3.8 percent in the prior month (originally 3.9 percent). The report showed that job openings decreased in total private (-883,000 jobs) and in government (-82,000). Among the industries, the largest declines were in professional and business services (-309,000), health care and social assistance (-115,000), and retail trade (-113,000).

Meanwhile, the number of hires plunged by 31.1 percent m-o-m to a series low of 3.524 million in April from a revised 5.111 in March. The hiring rate decreased to 2.7 percent in April from an unrevised 3.4 percent in March. The hires level dropped for total private (-1,439,000) and for government (-148,000). Hires declined in a number of industries, with the largest declines in professional and business services (-422,000), accommodation and food services (-247,000), and construction (-196,000).

The separation rate in April was 9.888 million (the second-highest level in series history) or 7.5 percent, compared to a record 14.643 million or 9.7 percent in March. Within separations, the quits rate was 1.4 percent (-0.4 pp m-o-m), and the layoffs rate was 5.9 percent (-1.7 pp m-o-m).

FXStreet reports that фccording to Senior Economist at UOB Group Alvin Liew, the Japanese economy is expected to contract further in the second quarter due to the impact of the coronavirus crisis.

“Japan’s 1Q 2020 GDP remained in contraction but it was revised to a smaller -0.6% q/q (-2.2% annualized rate) in 1Q… and an improvement from the 1st preliminary estimate of -0.9% q/q (-3.4% annualized rate).”

“The main factor for the 1Q upward revision was the surprise turnaround in business spending/capital expenditure (capex) which recorded a 1.9% q/q increase (instead of the preliminary estimate of -0.5% q/q) even as other major GDP segments (including private consumption, public demand, net exports and private inventories) continued to decline, contributing to the 1Q weakness.”

“Despite the more benign 1Q decline, Japan’s outlook has definitely worsened in light of the COVID-19 pandemic and the measures taken to contain the spread, and we see Japan facing significant challenges due to the virus impact, on both trade and the domestic economy.”

“The real test of the severity of the COVID-19 driven GDP contraction will be in 2Q 2020. We expect the 2Q contraction to be more severe, at -5% q/q (-18.6% annualized rate). This is slightly worse than the sharpest contraction Japan experienced during the great recession in 2008/2009 (at -4.8% q/q, -17.8% annualized rate in 1Q 2009) while some polls expect the contraction to exceed 20%, potentially the worst decline on record.”

“While the copious amounts of fiscal and monetary stimulus will help cushion the economic fallout (including the latest US$1.1 trillion second extra budget to be tabled at the Japan Diet this week), we believe it is inevitable Japan will enter a full recession this year. Based on the significant downgrade in the 2Q outlook, we expect Japan full-year GDP to contract by 5.5% in 2020 (from +0.7% in 2019).”

U.S. stock-index futures fell on Tuesday, as investors decided to take profits after the recent strong rally and ahead of the Fed’s meeting. 

Global Stocks:

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

Amazon (AMZN) target raised to $3000 from $2600 at BofA/Merrill

Amazon (AMZN) target raised to $3000 from $2725 at Wells Fargo

Walt Disney (DIS) downgraded to Equal Weight from Overweight at Consumer Edge Research; target $125

Chevron (CVX) downgraded to Neutral from Buy at BofA/Merrill

GBP traded mixed against other major currencies in the European session on Tuesday as global risk appetite deteriorated somewhat and uncertainties about the EU-UK post-Brexit relationship and the UK's economy reopening returned in focus.

The pound fell against EUR and safe-haven currencies, but it was firmer against commodity currencies.

The fourth round of trade talks between Britain and the European Union (EU) finished last Friday and both sides stated that limited progress had been made. London has until the end of July to request an extension to the Brexit transition period, which is due to end on December 31. However, the UK's officials have continually insisted they would not extend the transition period beyond that date.

The British Paymaster General Penny Mordaunt told parliament today that the UK would not be extending the Brexit transition period and that their policy on zero quotas and zero tariffs had not changed.

On Monday, the British government introduced new 14-day quarantine rules for international arrivals. The new rules are very unpopular with airlines and travel companies, warning of the severe damage they can cause to the aviation and travel industry. 

Market participants are awaiting more information about the British government's plans for the further reopening of the UK economy. The prime minister is expected to discuss further lockdown easing with his cabinet this week. Downing Street stated on Monday that the government “continued to follow the road map” published by the government last month. 

In addition, the global risk sentiment was dented somewhat by Germany's April trade data, which revealed that the country's exports fell at the sharpest pace since records began in 1950 due to the coronavirus-related lockdown measures.

• Our policy on zero quotas and zero tariffs has not changed
• Political declaration is not a treaty and so there will be differences of interpretation and the EU cannot be the referee
• We cannot keep negotiating forever
• We have to increase and escalate negotiations
• We are working hard to deliver for financial services
• We will make some progress when the EU accepts UK as sovereign nation

FXStreet notes that EUR/USD is currently testing the 1.1268/58 support. Analysts at Credit Suisse see a correction of the rally with a rebound expected at 1.1194 to trigger a retest the 1.1367 area.

“EUR/USD remains capped for now as expected at our main flagged resistance at 1.1367/69 - the 38.2% retracement of the entire 2018/2020 bear trend and long-term downtrend from 2018 - and we continue to look for a correction/consolidation to the strong rally of the past two weeks.” 

“Support moves to 1.1268/58 initially, with next support at 1.1218, then the 38.2% retracement of the rally from late May and price support at 1.1194/84. We look for this latter area to then ideally hold and for a fresh move higher to emerge for a retest of 1.1367/69.”

“Above 1.1320 can reassert an upward bias for strength back to 1.1344, then a retest of 1.1367/69. A clear break above here and then 1.1384 can then expose the key 1.1495 March high for the year. Whilst this should clearly be respected, a closing break would see the completion of a medium-term bullish reversal, with just initial resistance then seen at 1.1571/96.”

NFXStreet reports that economist Ho Woei Chen, CFA, at UOB Group, assessed the latest trade balance figures in the Chinese economy.

“China’s exports (in USD-terms) fell -3.3% y/y in May reversing from a gain of +3.5% y/y in April. However, this was better than consensus forecast of -6.5% y/y and was partly due to a higher base of comparison in May 2019.”

“However, the imports contraction deepened to -16.7% y/y in May from -14.2% y/y in April and was well-below consensus forecast of -7.9% y/y. The declines were led by large falls in China’s imports of transportation equipment such as aircraft and motor vehicles as well as commodities including petroleum and coal products whereas imports of food such as soybeans rose in May.”

“With the let-down in imports, China’s trade surplus rose to US$62.9bn from US$45.3bn in April, the highest since January 2016.”

“Year-to-date, China total exports contracted by -7.7% y/y and imports by -8.2% y/y… On aggregate, China’s trade surplus with the US has narrowed compared to US$110.4 bn in the same period in 2019. We expect the trade surplus to widen as US demand recovers following the reopening of its economic sectors.”

“Overall outlook for China’s trade is expected to continue to improve as more economies emerge from their COVID-19 lockdowns… The demand outlook is expected to improve more materially in the second half of the year to drive export gains in China.”

FXStreet reports that the Credit Suisse analyst team apprises that key support at 107.68/67 ideally holds further weakness with a break of 108.55 needed to alleviate downside pressure.

“The decline, as sharp as it has been, has not yet extended below the downward sloping ‘neckline’ to the base, as well as the 78.6% retracement of the rally from late May at 107.68/67. We look for this to try and hold further weakness to maintain admittedly diminishing thoughts of a base.” 

“Below 107.67 though would see the base decisively negated to keep the immediate risk lower with support seen next at 107.38, then more importantly back at the 107.08/03 late May low.” 

“Above 108.55 is needed to ease the immediate downside bias as well as put the market back above its 200-day average, with resistance seen next at 108.95, then 109.27.”

FXStreet reports that Alvin Liew at UOB Group’s Global Economics & Markets Research assessed the latest release of the US Non-farm Payrolls for the month of May.

“Stunning, truly stunning. What was expected to be another month of job losses into the millions… turned out to be a record 2.51 million jobs gained in May (the most since at least 1939 while the previous above 1 million monthly print was way back in September 1983 at 1.1 million). The May NFP jump was in sharp contrast to the recent ADP report which saw 2.8 million job losses.”

“In line with the job gains, US unemployment rate eased to 13.3% (from 14.7% in April) even as the labor participation rate climbed higher to 60.8% in May, from 60.2% in April which was the lowest since January 1973 (60.0%). Two crucial issues are in focus for the improved unemployment rate. First, it was uneven as unemployment among white men saw a decline to 10.7% (from 12.4%) and white women also saw a decline to 13.1% (from 15.0%) but African-Americans saw a slight uptick of 0.1ppt to 16.8% even as African-American men’s rate fell to 15.5% (from 16.1%). Asian Americans fared the worst, as their unemployment rose by 0.5ppt to 15%. The other more serious issue was that BLS highlighted a persistent misclassification of a large number of workers as ‘absent’ from work instead of “unemployed on temporary layoff” in March, April and May. In Its FAQ, the BLS estimated that if the misclassification error did not occur, then unemployment rate may be 3.1ppt higher at 16.4% in May versus the official estimate of 13.3%, while April’s rate could be at 19.8% (versus 14.7% reported) and March at 7.5% (versus 4.4% reported).”

“The private sector was entirely responsible the jobs gains with 3.09 million while the government lost another 585,000 jobs, again mainly due to school closures to contain COVID-19.”

FXStreet reports that Lars Sparresø Merklin from Danske Bank has updated the EUR/USD forecast to 1.15 in one month and to 1.11 in twelve months. 

“We revise our one-month and three-month forecast to 1.15 while lifting our six-month and twelve-month forecast to 1.11. This is a parallel shift upwards of six figures reflecting not only global reflation trends but also a one-off level from changed European tail risks. The key risk for our six-twelve month view will be how the Fed moves in the second half of 2020.”

“Longer-term issues have still to be addressed within core European industries (autos, banks, etc.), Brexit remains unresolved and Italy may enter new debt sustainability discussions by year-end. Further, positive macro surprises in the US may help to stem USD weakness. Lastly, and most importantly, we have yet to see real commitment from the Fed to pursue inflation overshooting.”

• ECB actions have been necessary and proportionate
• We can contemplate purchasing high yield debt
• Deflation risks are elevated in euro area

Bloomberg reports that the employment outlook in China will deteriorate in the third quarter because of the disruption to global business caused by the Covid-19 outbreak, a private survey showed.

The outlook for net employment will be weaker next quarter than now, according to a survey by ManpowerGroup Inc., the global labor supply company. The index will weaken to 3% in the July-September period from this quarter’s 6%. It was 8% in the same period last year.

A positive number suggests employers will increase hiring from the current quarter.

“The COVID-19 pandemic has posed significant challenges in the job market due to its impact on business activities amid the downward pressure exerted by the micro-economy,” the company said in a press release Tuesday. “The optimistic outlook is that China has been recovering more steadily than other countries from the pandemic.”

The transportation and utilities sectors are forecast to have the strongest hiring as China speeds up the construction of traditional infrastructure including expressways and waterway transport projects, as well as technology-focused new infrastructure such as 5G networks and big data centers, according to the report. However, the outlook for all sectors is weaker than in both the current three-month period and the same period last year.

Large companies will expand payrolls in the next three months while micro-sized firms are expected to cut their workforce. Despite the worsening situation, China’s labor market outlook remains relatively strong globally, lagging behind only Japan and India, and at the same level as the U.S. and Taiwan, the survey noted.

The survey results are based on a sample of 4,201 employers in China.

FXStreet reports that analysts at Credit Suisse look for a break of the December 2019 and current year highs at 0.7024/32 after a consolidation following a fairly aggressive reversal from this point. 

“With daily RSI momentum still in heavily overbought territory, we still expect further near-term consolidation, before an eventual resumption of the uptrend.” 

“An eventual sustained closing break above 0.7032 and then 0.7041 would reinforce the view of a broader change in trend to the upside, with resistance then seen initially at the July 2019 high and 78.6% retracement of the April 2019/March 2020 downfall at .7082/92, before the 61.8% retracement of the fall from 2018 at 0.7133/40.”

“Support moves initially to 0.6883/57, which now ideally holds to keep the upside bias intact. Removal of here would see a correction (rather than just consolidation) and a move back to the 200-day average and 2.6% retracement of the March/June surge at 0.6664, where we expect to see a concerted effort to hold.”

According to the report from Eurostat, the number of persons employed decreased by 0.2% in the euro area and by 0.1% in the EU in the first quarter of 2020 compared with the previous quarter. This is the first decline in the time series since the second quarter of 2013 for the euro area and the first quarter of 2013 for the EU. In the fourth quarter of 2019, employment increased by 0.3% in the euro area and by 0.2% in the EU.

Compared with the same quarter of the previous year, employment increased by 0.4% in both the euro area and the EU in the first quarter of 2020 (after +1.1% and +1.0% respectively in the fourth quarter of 2019).

Based on seasonally adjusted figures, Eurostat estimates that in the first quarter of 2020, 209.1 million people were employed in the EU, of which 160.4 million were in the euro area. In relation to the COVID-19 pandemic, employment in persons decreased by 0.3 million in the euro area and by 0.2 million in the EU compared with the fourth quarter of 2019.

While the effect of the COVID-19 pandemic on employment in persons was mitigated by government support schemes, the impact on hours worked is generally much more pronounced. The number of hours worked decreased by 3.1% in the euro area and by 2.6% in the EU in the first quarter of 2020, compared to the previous quarter.

According to the report from Eurostat, seasonally adjusted GDP decreased by 3.6% in the euro area and by 3.2% in the EU during the first quarter of 2020, compared with the previous quarter. These were the sharpest declines observed since time series started in 1995. In March 2020, the final month of the period covered, COVID-19 containment measures began to be widely introduced by Member States. In the fourth quarter of 2019, GDP had grown by 0.1% in both the euro area and the EU.

Compared with the same quarter of the previous year, seasonally adjusted GDP decreased by 3.1% in the euro area and by 2.6% in the EU in the first quarter of 2020, after +1.0% and +1.2% respectively in the previous quarter. These were the sharpest declines since the third quarter of 2009 (-4.5% for euro area and -4.4% for EU).

During the first quarter of 2020, household final consumption expenditure decreased by 4.7% in the euro area and by 4.3% in the EU (after +0.1% in the euro area and +0.3% in the EU in the previous quarter). Gross fixed capital formation decreased by 4.3% in the euro area and by 3.9% in the EU (after +5.0% and +4.3% respectively). Exports decreased by 4.2% in the euro area and by 3.5% in the EU (after +0.1% and -0.1% respectively). Imports decreased by 3.6% in the euro area and by 3.2% in the EU (after +1.9% and +1.5% respectively). Household final consumption expenditure had a strong negative contribution to GDP growth in both the euro area and the EU (-2.5 and -2.3 percentage points – pp, respectively) and the contribution from gross fixed capital formation was also negative in both zones (-1.0 and -0.9 pp respectively) as was the contribution of the external balance. The contribution of changes in inventories was positive for both zones (+0.3 pp for the euro area and +0.4 pp for the EU).

FXStreet reports that unless USD/CNH could move above 7.1210, another visit to the 7.04 zone should remain on the cards, noted FX Strategists at UOB Group.

24-hour view: “We expected USD to ‘trade between 7.0600 and 7.1000’ yesterday. Instead of trading sideways, USD dropped to a low of 7.0546. The decline lacks momentum and further USD is unlikely for today. From here, USD could edge higher but any advance is unlikely to move above 7.0850. Support is at 7.0550 followed by 7.0500.”

Next 1-3 weeks: “Our latest narrative was from last Wednesday (03 Jun, spot at 7.1050) wherein ‘a daily closing below 7.0850 could signal the start of a deeper decline in USD’USD plummeted last Friday (05 Jun) and closed on a weak note at 7.0685. While oversold shorter-term conditions could lead to a couple of days of consolidation first, barring a move above 7.1210 (‘strong resistance’ level), USD could weaken further to 7.0400 in the coming days.”

Reuters reports that around a quarter of German companies needed liquidity aid last month, the Ifo economic institute said on Tuesday, as Europe's largest economy is struggling with the impact of the coronavirus pandemic despite a gradual easing of social distancing measures.

Some 24% of companies polled needed aid in May - unchanged from April, Ifo said.

The survey showed that 85% of travel agencies and tour operators accepted aid compared with 17% in the industrial sector and 5% in construction.

FXStreet reports that GBP/USD is retracing this morning, and Commerzbank’s Karen Jones expects the cable to find initial support at 1.2486 while the 78.6% retracement at 1.2818 should cap.

“GBP/USD there is scope for a test of the 78.6% retracement at 1.2818 (of the move down from the March peak). Given that we have a TD perfected set up on the daily chart and a 13-count on the 240-minute chart, we suspect that this will hold.” 

“Dips lower should find initial support at 1.2468/86 ahead of the short-term uptrend at 1.2330, which is expected to hold the downside.”

“A daily chart close above the 78.6% Fibonacci retracement at 1.2818 is needed to target the 200-week ma, which lies at 1.2924.”

Reuters reports that oil prices are likely to pull back in the coming weeks due to the uncertain path of future demand and a "daunting" inventory overhang, Goldman Sachs said in a note dated Monday.

"The collapse in (refining) margins to unprecedented lows is reflective of both over-valued crude prices as well as a more moderate demand recovery, two pillars of our short-term bearish view," the Wall Street bank said.

Goldman expects Brent prices to reach $35 per barrel in the short term, compared with around $43 hit on Monday.

Oil prices bounced to three-month highs on Monday after the OPEC+ nations agreed to extend record output cuts of 9.7 million barrels per day into July amid signs of a quicker-than-expected economic recovery.

Goldman raised its 2020 Brent price forecast to $40.40 a barrel from $35.60 earlier, citing positive sentiment around the reopening of economies. WTI prices are now forecast to reach $36 this year, compared with a previous estimate of $33.10.

"This rebound has been fueled by a macro risk-on backdrop and a policy induced Chinese crude import binge, yet fundamentals are turning bearish," Goldman said.

With demand expectations running ahead of a more gradual and still uncertain rebound, the oil market faces a big challenge of normalising a billion barrels of excess inventories, analysts at the bank wrote.

Goldman expects supplies to increase with U.S. shale and Libyan shut-in production coming back online, which would lead to a deficit of 1.2 million barrels per day (bpd) versus a prior estimate of 2 million bpd for June.

FXStreet reports that in opinion of FX Strategists at UOB Group, NZD/USD could extend the recovery to levels beyond 0.6600 in the next weeks.

24-hour view: “We held the view yesterday that NZD ‘could edge near to 0.6550 first before a pullback can be expected’. The subsequent strength in NZD exceeded our expectation as it rose to 0.6567 before ending the day on a firm note at 0.6559 (+0.86%). Conditions remain severely overbought but the current advance is not showing any sign of weakness just yet. From here, NZD could grind higher and test the 0.6600 level. For today, a sustained advance above this level is unlikely. Support is at 0.6530 followed by 0.6500.”

Next 1-3 weeks: “We have held a positive view in NZD for more than 2 weeks. In our latest narrative from last Friday (05 Jun, spot at 0.6460), we indicated that ‘the prospect for NZD to extend to 0.6550 is not that high for now’. However, amid severely overbought conditions, NZD managed to move above 0.6550 yesterday (08 Jun) and touched a high of 0.6567. Conditions remain overbought but the resilient rally in NZD appears not ready to ‘call it a day” just yet. That said, any further advance is expected to be at a slow pace. The next resistance from here is at 0.6600 followed by 0.6630. On the downside, a breach of 0.6450 (‘strong support’ level previously at 0.6410) would indicate that the positive phase has come to an end.”

The dollar rose on the back of profit-taking, which slowed the growth of commodity currencies, while the growth of the Japanese yen indicated investors ' anxiety in anticipation of the Fed's next steps

The yen continued Monday's rally as the Japanese currency rose to a one-week high, while investors weighed the likelihood of increased purchases of government bonds - or an extremely "dovish" forecast by the Fed, which begins a two-day meeting on Tuesday.

At the same time, the Australian and New Zealand dollars retreated from the peak values reached earlier in the session.

The Fed will release the results of the meeting on Wednesday at 18.00 GMT, and the press conference of the head of the Fed Jerome Powell will begin at 18.30 GMT.

The Fed is expected to keep interest rates unchanged. In addition, futures pricing in recent days indicates that investors have abandoned expectations of a rate cut below zero next year.

• French economic activity operating down 17% from normal levels at end-May, less than 12% possible in June.

• French economy seen contracting 15% QoQ in Q2 after slumping 5.3% in Q1

• French economy to contract 10.3% in 2020, grow 6.9% in 2021, 3.9% in 2022.

• French economy seen shedding nearly 1 million jobs in 2020, unemployment to reach a record 11.8% in the first half 2021.

FXStreet reports that cable could attempt a test of the 1.2800 area in the next weeks, suggested FX Strategists at UOB Group.

24-hour view: “Our expectation for GBP ‘to test 1.2760 first before a pullback can be expected’ did not materialize. Instead, GBP dropped to 1.2626 first before rebounding to a high of 1.2736. GBP opened on a firm note this morning and upward pressure is building up. From here, GBP could move above 1.2760 even though the major 1.2800 level is likely out of reach. Support is at 1.2700 followed by 1.2660.”

Next 1-3 weeks: “We have held a positive view in GBP since early last. We detected a slowdown in momentum and indicated last Friday (05 Jun, spot at 1.2595) that ‘upward momentum has slowed a tad but a move to 1.2700 is still a distinct possibility’. That said, the subsequent strong surge that quickly blast past 1.2700 was not exactly expected (GBP surged to 1.2730 last Friday). Upward momentum has received a boost and from here, further GBP strength to 1.2800 would not be surprising. Only a break of 1.2560 (‘strong support’ level was at 1.2480 last Friday) would indicate the positive phase in GBP has run its course.”

According to the report from Federal Statistical Office (Destatis), Germany exported goods to the value of 75.7 billion euros and imported goods to the value of 72.2 billion euros in April 2020. Destatis also reports that exports decreased by 31.1% and imports by 21.6% in April 2020 year on year. That was the largest decline of exports in a month compared with the same month a year earlier since the introduction of foreign trade statistics in 1950. The last time German imports went down that much was in July 2009 during the financial crisis (-23.6%).

After calendar and seasonal adjustment, exports were down 24.0% and imports 16.5% compared with March 2020. For both exports and imports, this was the strongest month-on-month decline after calendar and seasonal adjustment since the beginning of the time series in August 1990.

The foreign trade balance showed a surplus of 3.5 billion euros in April 2020. That was the lowest export surplus shown for Germany since December 2000 (+1.7 billion euros). In April 2019, the surplus was 17.8 billion euros. In calendar and seasonally adjusted terms, the foreign trade balance recorded a surplus of 3.2 billion euros in April 2020.

The German current account of the balance of payments showed a surplus of 7.7 billion euros in April 2020, which takes into account the balances of trade in goods (+2.8 billion euros), services (+0.3 billion euros), primary income (+8.9 billion euros) and secondary income (-4.3 billion euros). In April 2019, the German current account showed a surplus of 20.6 billion euros.

• CNBC reports that U.S. President Donald Trump could restart rallies in the next two weeks as his campaign gears up for the November presidential election. Trump last held a rally in March before pausing those events due to the coronavirus pandemic.

• Meanwhile, the World Health Organization said data from countries doing “detailed contact tracing” shows the virus transmits from asymptomatic individuals to others only in “very rare” instances. Preliminary evidence from the earliest outbreaks showed the virus was being spread from person-to-person contact, even from people who did not show symptoms.

• Global cases: More than 7 million

• Global deaths: At least 404,413

• U.S. cases: More than 1.96 million

• U.S. deaths: At least 110,990

EUR/USD

Resistance levels (open interest**, contracts)

$1.1456 (1082)

$1.1426 (1503)

$1.1401 (1643)

Price at time of writing this review: $1.1288

Support levels (open interest**, contracts):

$1.1229 (1000)

$1.1199 (651)

$1.1165 (455)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date July, 2 is 40827 contracts (according to data from June, 8) with the maximum number of contracts with strike price $1,0800 (1881);

GBP/USD

Resistance levels (open interest**, contracts)

$1.2835 (959)

$1.2800 (554)

$1.2776 (460)

Price at time of writing this review: $1.2705

Support levels (open interest**, contracts):

$1.2566 (198)

$1.2532 (971)

$1.2495 (1286)

Comments:

- Overall open interest on the CALL options with the expiration date July, 2 is 12761 contracts, with the maximum number of contracts with strike price $1,2800 (1472);

- Overall open interest on the PUT options with the expiration date July, 2 is 14004 contracts, with the maximum number of contracts with strike price $1,2550 (1286);

- The ratio of PUT/CALL was 1.10 versus 1.10 from the previous trading day according to data from June, 8

* - 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.