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Daily Outlook – 18 May 2020
The massive week ahead! Stock markets had a positive start to the week after comments from Fed Chairman Powell, who said the central bank has plenty of ammunition to fight the recession, even as he flagged tough times ahead. “ negative interest rates is probably not an appropriate or useful policy”
The US Commerce Department said it would restrict the ability of Huawei to develop semiconductors abroad with US technology.
Japan Q1 GDP came in at -0.9% q/q – Two consecutive quarters of contraction for the Japanese economy — the economy moves into recession for the first time since H2 of 2015.
BREXIT – Risk of the UK leaving the EU without a trade deal – UK government has remained resolute in its stance that it will not delay its departure from the EU’s single market at year-end – Brussels as well. – BoE’s Haldane says looking at options alongside, or beyond negative rates
ECB chief economist Lane also stressed again that the central bank can extend the PEPP program in size and/or duration.
GBP under pressure. USD and JPY fell back against most currencies Gold spiked to 1763. Bitcoin nearing the $10,000 level, currently at 9900s
USOIL at $30.64 ( 2-months high). (1) Goldman Sachs said the worst is over for the oil market, with supply/demand balance seen in June, as production cuts kick in, and as opening economies improve the demand side of the equation. (2) Saudi Arabia and Kuwait have decided to suspend output at the Khafji field.
USDIndex – at 100.34, sustained gains. PP 100.30 S1 100.11, R1 100.55
EUR – is trading little changed against the USD at 1.0821 (PP) .S1 at 1.0786 and R1 at 1.0850
JPY – lifted slightly to 107.20. R1 at 107.50 and S1 at 106.91
GBP – dipped to 1.2070. Currently at 1.2106, below PP. S1 is at 1.20563
AUD – rejected the R1 at 0.6455 and it is currently at 0.6437. PP at 0.6425. (the biggest gainer so far)
CAD – below PP at 1.4080. S1: 1.4043 and R1: 1.4140
CHF – below PP at 0.9712. S1: 0.9690 and R1: 0.9740
GOLD – spiked to 1763 breaking R2.
USA500 – above 3-day highs and 20-DMA at 2890
TODAY: EMPTY, but gets lively tomorrow with RBA minutes U.K. labor market data and German ZEW investor confidence.
Biggest mover – NZDJPY (+0.58%) retested 63.54 bottoms before rebounding to its PP at 63.85. The asset remains well below Friday’s peak, with all intraday momentum indicators negatively configured despite the rally earlier. MACD lines turned above signal line but hold into the negative area, RSI is at 51 and Stochastic turned southwards. H1 ATR 0.12, Daily ATR 0.84
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