CFD Markets News and Forecasts — 10-04-2020

On Monday, at 22:45 GMT, New Zealand will announce the change in the number of tourists for February.

On Tuesday, at 01:30 GMT, Australia will present the NAB business confidence index for March. At 12:30 GMT, the US will publish the import price index for March. At 22:45 GMT New Zealand will report on changes in the prices of food products in March.

On Wednesday, at 00:30 GMT, Australia will release the Westpac consumer confidence index for April. At 03:00, China will announce a change in the trade balance for March. At 06:45 GMT, France will present the consumer price index for March, and at 08:00 GMT, the report of the International energy Agency will be released. At 12: 30 GMT, the US will report changes in retail sales for March and release the index of activity in the manufacturing sector from the New York Fed for April. At 13:15 GMT, the US will announce changes in the capacity utilization and industrial production for March. At 14:00 GMT in Canada, the Bank of Canada's interest rate decision will be announced. At 14:00 GMT, the US will announce changes in the business inventories and publish the NAHB housing market index for April. At 14:30 GMT, the US will report changes in oil reserves according to the Ministry of energy. At 15:15 GMT, the Bank of Canada will hold a press conference. At 18:00 GMT in the US, the publication of the Fed's "Beige Book"will take place. At 20:00 GMT, the US will announce changes in the net and total volume of purchases of long-term US securities by foreign investors for February.

On Thursday. at 01:00 GMT, Australia will report a change in consumer price inflation expectations from MI for April. At 0130 GMT, Australia will report changes in the unemployment rate and employment for March. At 06:00 GMT, Germany will release the consumer price index for March. At 06:30 GMT, Switzerland will present the producer and import price index for March. At 09:00 GMT, the Eurozone will announce changes in industrial production for February. At 12: 30 GMT, the US will report changes in the number of initial applications for unemployment benefits, as well as the volume of construction permits and the housing starts for March. Also at 12: 30 GMT, the US will publish the Philadelphia Fed manufacturing index for April.

On Friday, at 02:00 GMT, China will announce changes in the GDP for the 1st quarter, as well as the volume of investment in fixed assets, industrial production and retail trade for March. At 04:30 GMT, Japan will report changes in industrial production for February and release an index of activity in the service sector for February. At 09:00 GMT, the Euro zone will publish the consumer price index for March. The IMF will also meet on Friday. At 12:30 GMT, Canada will report changes in the foreign securities purchases for February. At 14:00 GMT, the US will release the leading indicators for March. At 17:00 GMT the US will release a Baker Hughes report on the number of active oil rigs.

On Sunday, at 22:45 GMT, New Zealand will publish the consumer price index for the 1st quarter. At 23:50 GMT, Japan will report changes in the foreign trade balance for March.

Reuters reported that Xu Haidong, the senior official of the China Association of Automobile Manufacturers (CAAM), the country’s largest auto industry association, said they expect to see a second-half pick-up in auto sales.

“If we only consider domestic factors, we believe the industry in the second half of the year should be able to recover to the level of the same period last year." He, however, noted that "it is still difficult to make up for first-quarter and first-half losses.”

According to CAAM forecasts, China's auto sales are to drop more than 10% in the first half of the year, and around 5% for the whole year if the outbreak is effectively contained before April.

In March, auto sales in China tumbled 43.3% y/y as the world’s biggest automobile market struggles to get into gear following a prolonged coronavirus-related demand slump. The March decline, however, was less sharp than in February, when sales plunged 79% y/y. 

• We are not at all thinking of debt financing by BoJ
• Notes BoJ is buying government bonds (from the market) based on its own judgment; believes BoJ adopts such a step as part of its battle with deflation
• Does not believe BoJ's governor Kuroda was considering financing debt in the same way as BoE

According to ActionForex, analysts at RBC Financial Group note that this week gave us some hard data on the impact of coronavirus containment measures.

"Canada's employment numbers were as bad as feared, with 1 million people losing their jobs through mid-March and economy-wide hours worked falling by 15%. Conditions deteriorated toward the end of the month and in early-April, and more than 5 million Canadians have reportedly filed for employment insurance or other benefits (those payments have already started to roll out)."

"March's dramatic job losses tee up for a significant decline in economic activity in the current quarter - our latest forecasts look for Canada's Q2 GDP to fall by more than 30% at an annualized rate. That sharp slowdown will start to make its way into next week's data. While February's manufacturing report will already be out of date when it's released, March's home resales will show some coronavirus effects with local board releases indicating sales activity slowed sharply in the second half of the month. Wednesday's Bank of Canada meeting isn't likely to deliver any policy changes - the BoC was very active in March, cutting its policy rate to the effective lower bound and launching a new QE program (among other liquidity-supplying measures)."

"We'll also be keeping an eye on COVID-19 cases, which just surpassed the 1.5 million mark globally, having increased 10% per day on average over the past week. Hard-hit Italy's containment measures continue to bear fruit, while the US case trajectory remains troubling. Within Canada, British Columbia is having some success in bending the curve and Alberta's numbers are only slightly worse on a population-adjusted basis. Quebec stands out as having the worst outbreak by far, with the province's early March break (more recreation and traveling before containment measures were increased) being at least partly to blame."

• Subsequently, oil production cut will be 8 mb/d for 6 months - from July 1 to December 30 this year
• After, oil output cut will be 6 mb/d for 16 months - from January 1 of 2021 to April 30 of 2022
• Baseline for calculation of adjustments will be production levels of October 2018; for Russia and Saudi, baseline level will be 11.0 mb/d production level
• Extension of the decision will be reviewed in December 2021
• Agreement is conditional on the consent of Mexico

FXStreet reports that in remarks previewing next week's virtual meetings of the 189-nation International Monetary Fund (IMF) and the World Bank, Managing Director Kristalina Georgieva warned that the coronavirus pandemic will drown the global economy into the deepest recession since the Great Depression.

"We anticipate the worst economic fallout since the Great Depression.

The IMF will release an updated world economic forecast on Tuesday that will show just how quickly the coronavirus outbreak has turned what had been expected to be a solid year of growth into a deep downturn.

With weak health systems to begin with, many face the dreadful challenge of fighting the virus in densely populated cities and poverty-stricken slums, where social distancing is hardly an option.

I stress there is tremendous uncertainty around the outlook.

It could get worse depending on many variable factors, including the duration of the pandemic."

According to the report from Insee, in February 2020, output increased again in the manufacturing industry (+0.9%, after +1.2%), as well as in the whole industry (+0.9%, after +1.1%). Economists had expected a 0.1% increase in the whole industry.

From December to February, output decreased compared to the previous three months in manufacturing industry (−1.3%), as well as in the whole industry (−1.4%).

Over this period, output declined in "other manufacturing"(−1.1%), in the manufacture of transport equipment (−2.8%), in mining and quarrying, energy, water supply (−2.1%) and in the manufacture of machinery and equipment goods (−1.7%). It plummeted in the manufacture of coke and refined petroleum products (−5.6%). Conversely, it was virtually stable in the manufacture of food products and beverages (−0.1%).

In the manufacturing industry, cumulative output over the last three months from December to February declined sharply compared to the same three months a year ago (−2.2%), as well as in the whole industry (−2.4%).

Over a year, output slumped in the manufacture of coke and refined petroleum products (−31.7%). It decreased markedly in the manufacture of transport equipment (−7.3%), in mining and quarrying, energy, water supply (−3.3%) and more moderately in "other manufacturing" (−0.8%), in the manufacture of machinery and equipment goods (−1.8%) and in the manufacture of food products and beverages (−0.6%).

During today's Asian trading, the US dollar fell against the euro and the yen.

The day before, the US currency fell in price following the announcement by the Federal reserve system (Fed) of the launch of a number of new and expanding existing programs to support various sectors of the US economy, which should provide a flow of loans totaling about $2.3 trillion.

In particular, the Fed intends to lend to state authorities, cities and medium-sized businesses that lost revenue due to restrictions imposed in the United States to curb the spread of coronavirus. In addition, the Fed will create a mechanism for lending to large companies that have recently lost their investment rating.

The ICE index, which tracks the dollar's performance against six currencies (the euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona), fell 0.08% in trading.

The further development of the situation with coronavirus in the United States, as well as the response measures taken by the administration of American President Donald Trump, will be the key drivers of the dollar in the run-up to the presidential elections in the US scheduled for November, experts say.

CNBC reports that according to trade expert, governments around the world will turn increasingly protectionist in the near term as they try to limit the economic damage from the coronavirus pandemic.

COVID-19 has already spread to more than 180 countries and territories and caused some countries to restrict exports of medical supplies - that's a decision that could spill into other areas such as food products, said Deborah Elms, executive director at consultancy Asian Trade Centre.

"There is a much bigger wave of protectionism in the near term that we should expect, that is not just in medical supplies ... but it will also start to affect food," she told CNBC.

"As countries get nervous about food stocks and food supply, food security, they're going to stop allowing the export or restrict the import of food products," she added.

As governments seek to protect their economies, they will likely focus on saving their "favored" industries - another way that increased protectionism can play out, said Elms.

"As the economic distress increases, the response by many governments will be to assist favored industries, favored sectors or sectors where they're particularly concerned about catastrophe, especially in jobs. And they will respond, most likely, by pursuing protectionism," she explained.

• China's National Health Commission (NHC) said there were 42 new confirmed cases as of April 9, of which 38 were attributed to travelers coming from overseas. That brings the country's total to 81,907 cases, the NHC said.

• European Union finance ministers agreed on Thursday on half-a-trillion euros worth of support for their coronavirus-battered economies after weeks of wrangling that exposed painful divisions in the bloc headed for a steep recession.

• Global cases: At least 1,595,350.

• Global deaths: At least 95,455.

• Most cases reported: United States (461,437), Spain (153,222), Italy (143,626), France (118,781), Germany (118,181).

eFXdata reports that SocGen Research discusses EUR/USD technical outlook and notes its unsettled price action as of late.

"EUR/USD challenged the multi year ascending trend line in March but managed to close above it for that month. The pair formed a yearly high in March but quickly gave back those gains and hit a multiyear low. This suggests unsettled price action," SocGen notes.

"1.1165 is near term resistance. This must be overcome for denoting signals of an extended rebound towards 1.1315 and graphical levels of 1.1497/1.1570.

'If back to bearish momentum, next objectives will be at 1.0745 and last month trough at 1.0634/1.0590. A higher trough as compared to this low is awaited. Failure to hold above 1.0634/1.0590 can lead to a retest of 2016/2017 levels near 1.0340," SocGen adds.

RTTNews reports that China's consumer price inflation slowed more-than-expected to a five-month low in March as measures to contain the spread of coronavirus, or covid-19, lowered household demand, data from the National Bureau of Statistics showed Friday.

Consumer prices rose 4.3 percent year-on-year in March, slower than the 5.2 percent increase in February. Inflation was forecast to slow to 4.8 percent.

On a monthly basis, consumer prices fell 1.2 percent, which was the first fall in nine months. Prices had advanced 0.8 percent in February.

Pork prices, main source of food inflation, grew 116.4 percent annually, but slower than the 135.2 percent rise in February.

Food prices gained 18.3 percent and non-food prices advanced 0.7 percent.

Core inflation, which excludes food and energy prices, rose to 1.2 percent from 1 percent in February.

Due to the sufficient market supply, prices of eggs, fish products and fruits decreased and the fall in global oil prices lowered diesel and cooking gas costs, the statistical office said.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1074 (1481)

$1.1047 (745)

$1.1026 (739)

Price at time of writing this review: $1.0937

Support levels (open interest**, contracts):

$1.0882 (1306)

$1.0858 (1192)

$1.0830 (1726)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date May, 8 is 64789 contracts (according to data from April, 9) with the maximum number of contracts with strike price $1,1200 (3211);

GBP/USD

Resistance levels (open interest**, contracts)

$1.2617 (629)

$1.2573 (207)

$1.2541 (286)

Price at time of writing this review: $1.2462

Support levels (open interest**, contracts):

$1.2338 (298)

$1.2282 (570)

$1.2214 (572)

Comments:

- Overall open interest on the CALL options with the expiration date May, 8 is 13642 contracts, with the maximum number of contracts with strike price $1,2600 (948);

- Overall open interest on the PUT options with the expiration date May, 8 is 15560 contracts, with the maximum number of contracts with strike price $1,2850 (1073);

- The ratio of PUT/CALL was 1.14 versus 1.13 from the previous trading day according to data from April, 9

* - 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.