· The dollar was headed for its best week since early April on Friday as tumbling oil prices weighed on commodity currencies and division over Europe’s emergency fund dragged on the euro.
The dollar stands near a two-and-a-half week high against a basket of currencies =USD and is 0.9% stronger for the week. It is up nearly 3% against the oil-sensitive Norwegian krone NOK= and about 1% on the euro EUR=.
Moves in the Asian session were modest and led by a drift lower in the Australian and New Zealand dollars as inconclusive results from a Gilead antiviral drug trial on patients with COVID-19 unnerved traders who have been looking to headlines for direction.
“I’m running with a more bearish story for the next two or three weeks,” said Westpac FX analyst Imre Speizer.
“The economic data is going to be horrible. I’m betting that markets will be shocked by it, even though we know it’s coming, and that will cause risk sentiment to fall,” he said, which means selling pressure on the New Zealand dollar.
The euro fell to a one-month low of $1.0756 on Thursday, and struggled to lift much above it on Friday after the European Union agreed to build a trillion euro emergency fund, but left the details for later.
The euro last sat at $1.0772. The British pound GBP= was steady at $1.2352, which is down about 1.1% for the week, and the Japanese yen JPY= softened slightly to 107.64 per dollar.
· EUR/USD Forecast: Bearish pressure mounts
EUR/USD short-term technical outlook
The EUR/USD pair has finished the day below the 61.8% retracement of its latest daily advance at around 1.0830, with sellers rejecting attempts to advance beyond the level. The short-term picture is bearish, as, in the 4-hour chart, moving averages keep gaining downward strength above the current level, with the 20 SMA converging with the mentioned Fibonacci level. Technical indicators turned south below their midlines, but remain within familiar levels. The risk is skewed to the downside, toward the base of the range at 1.0678.
Support levels: 1.0750 1.0710 1.0680
Resistance levels: 1.0790 1.0830 1.0860
· EUR/USD: Break below 1.0770 is proved
The EUR/USD pair dropped below 1.0770, the precious April low, and this break is now confirmed as Friday's technical picture is showing bears are in the lead, FXStreet’s analyst Yohay Elam briefs.
“Momentum on the four-hour chart is pointing to the downside and EUR/USD trades below the 50, 100, and 200 Simple Moving Averages.”
“Support awaits at 1.0720, which was a stepping stone on the way up in mid-March, and the 2020 trough of 1.0640 is already in sight.”.
“Initial resistance is at 1.0770, and it is followed by last week's trough of 1.0810.”
· USD/JPY Price Analysis: Mildly bid below 108 after Thursday’s spinning top
USD/JPY justifies the previous day’s candlestick formation while taking rounds to 107.65 ahead of the European session on Friday.
While a spinning top suggested bears’ exhaustion on Thursday, a confluence of 21-day SMA, and 61.8% Fibonacci retracement of the pair’s February-March fall, near 107.95/108.00 restricts the recoveries.
Also likely to challenge the pair’s upside past-108.00 will be the monthly top surrounding 109.40, a break of which could recall buyers targeting 110+ figures.
On the contrary, a horizontal line connecting the monthly lows, near 106.90 restricts the pair’s immediate declines.
Should there be a further downside below 106.90, 106.00 and 105.90 are likely to keep the bears entertained.
• CORONAVIRUS CRISIS:
Ø Total confirmed cases: More than 2,732,737
Ø Total deaths: At least 191,152
Ø The coronavirus COVID-19 is affecting 210 countries and territories around the world and 2international conveyances: the Diamond Princess cruise ship harbored inYokohama, Japan, and the Holland America's MS Zaandam cruise ship.
Ø US cases: At least 886,709 (+267) and deaths: 50,243 (+7)
Ø Spain cases: At least 213,024 and deaths: 22,157
Ø Italy cases: At least 189,973 and deaths: 25,549
Ø Thailand cases: At least 2,854 (+15) and deaths: 50
· The Federal Reserve will publish unredacted details on who is borrowing how much under several new Fed lending facilities funneling trillions of dollars of support to a U.S. economy ravaged by the coronavirus pandemic.
It will also publish the amounts borrowed and interest rate charged, as well as overall costs, revenues and fees for each of those facilities.
· Global economy to contract by 2% in 2020, recovery to be U–shaped – Reuters poll
The latest Reuters of economists from across the globe showed that the global economy is expected to see the sharpest contract on record in 2020 due to the coronavirus pandemic-led lockdowns and stall in business activity.
Key findings
“Most major economies were in the midst of a severe economic downturn and their recoveries were predicted to be U-shaped.
More than 55% or 87 of 155 economists said the global economic recovery would be U-shaped. Thirty-one analysts said it would be V-shaped and 24 said it be more like a check mark. A few respondents expected a W- or L- shape.
The global economy was forecast to shrink 2.0% this year, compared to a 1.2% contraction predicted just three weeks ago and growth of 1.6% forecast before that in the March 20 poll, underscoring how fast the outlook has deteriorated.
Forecasts ranged between +0.6% and -6.0%.
Global growth next year was forecast to bounce back to 4.5%.
Nearly 90% of economists, or 147 of 165, said the risks to their forecasts for the second half of 2020 were skewed more to the downside, suggesting the outlook is likely to be downgraded again if the pandemic worsens.”
· China cuts TMLF interest rate by 20 basis points in latest economy support step
China’s central bank cut the interest rate on its targeted medium-term lending facility (TMLF) on Friday, following similar reductions to borrowing costs on other liquidity tools in the past few weeks to support the economy.
The People’s Bank of China (PBOC) said it lowered the one-year interest rate on the TMLF by 20 basis points to 2.95% from 3.15% in the previous operation.
In the same statement, the central bank said it injected 56.1 billion yuan ($7.93 billion) into the economy on Friday, when a batch of 267.4 billion yuan of TMLF loans was due to expire.
· Philippine President Rodrigo Duterte has extended until May 15 a lockdown in the capital Manila, his spokesman said on Friday, stretching to eight weeks one of the world’s strictest community quarantines to curb coronavirus infections.
The measures will be expanded to other regions with big outbreaks but modified in lower-risk areas, which would see a partial resumption of work, transport and commerce, Harry Roque told reporters.
· Poll signals strengthening support for Biden over Trump in three battleground states
Republican President Donald Trump trails Democrat Joe Biden among registered voters in three battleground states that he narrowly carried in 2016 and are seen as crucial to winning November’s election, according to an Ipsos public opinion poll conducted exclusively for Reuters.
The poll, which ran from April 15-20 in Michigan, Wisconsin and Pennsylvania, showed 45% of registered voters said they would support Biden, the presumptive Democratic nominee, while 39% said they would support Trump.
· U.S. Secretary of State Mike Pompeo said the COVID-19 pandemic shows the need to overhaul the World Health Organization, warning that Washington may never restore WHO funding and could even work to set up an alternative to the U.N. body instead.
· Japan’s new economic stimulus package in response to the coronavirus pandemic is estimated to boost real gross domestic product by about 4.4%, Economy Minister Yasutoshi Nishimura said on Friday.
Nishimura also said the government would hold a meeting of experts to decide whether to extend the country’s state of emergency beyond May 6. He did not say when the meeting would be held.
· With the U.S. and several European countries still reporting thousands of new coronavirus cases every day, questions remain on whether they can safely ease restrictions aimed at curbing the pandemic anytime soon, an analyst from Fitch Solutions said on Friday.
“China is reopening its economy in stages, but we’ve already seen some incipient risk of a second wave coming out of the city of Harbin,” he told CNBC’s “Squawk Box Asia,” pointing out that there was “upward pressure” on daily new cases reported when China started relaxing its measures.
“If you think about other countries such as the U.S., Spain and Italy, although the numbers of new cases have peaked, they’re still extremely high relative to what we saw in South Korea and China,” he said. “So the question is can they actually start to ease restrictions and open up the economies when they have such high number of new cases still.”
· Oil prices climbed on Friday, adding to gains from earlier sessions after producers such as Kuwait said they would move to cut output and the United States approved another package to cope with the turmoil caused by the coronavirus outbreak.
Brent crude LCOc1 was up 24 cents, or 1.1%, at $21.57 by 0622 GMT, after rising more than $1 earlier and jumping 5% on Thursday. U.S. oil CLc1 was up 38 cents, or 2.3%, at $16.88 a barrel, having surged 20% in the previous session.
Reference: Reuters, Worldometers, FX Street
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