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Global oil powers close in on historic deal to curb output

The largest oil producing countries in the world are working out conditions for an unprecedented deal to mitigate the destructive effects of the crisis caused by the coronavirus, in preparation for an emergency meeting this week.

The OPEC Secretariat invited a number of countries that were not previously members to the online meeting on the oil market (in total 36 participating countries).
At the same time, the USA and Canada were not included in the list of invitees.
For the deal to be successful , some form of cooperation with the United States is still required.

The expanded format is pleasing, but it lacks the United States and Canada. Of course, one would think that the participation of the USA and Canada does not make sense, because they are members of the G20, whose meeting will be held the day after OPEC+. But Argentina and Brazil, who were invited to the OPEC+ meeting, are also members of the G20.

Thereby now everything just confirms the version of US tactics aimed at postponing the final decision, and the possible "undermining" of the deal.
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🔥Market Watch🔥

💥It's time to quarantine💥


Since the end of last week, we hear more and more often that the economic consequences of the quarantine are extremely high and are largely underestimated. For example, Australia is already beginning to consider the possibility of partial easing of restrictions in connection with the epidemic. A number of other countries, including the United States, are also discussing such scenarios with the possibility of the partial reduction of restrictions for certain types of businesses.

Of course, the reduction of restrictions, which will lead to an increase in business activity, is a positive. Even though there is a possibility of the coronavirus spreading further, we are already witnessing another wave of interest in trading activity in the foreign exchange market.

Let's go back to Australia and AUD, which has strengthened quite a lot across the entire spectrum of the market. Thus, the AUD/USD currency pair has strengthened by 220 points since the beginning of this week, reaching a strong technical resistance level of 0.6200. Therefore, the emergence of information about the willingness to reduce restrictions, for example, the USA, should give a boost to the USD, along with any other large economies and their currencies.

Now, let's move on to the oil market and once again we hear Donald Trump, who hints that the United States is unlikely to join the OPEC+ deal. As a result, the price of WTI oil fell to $23 per barrel. Let me remind you that currently, the main driver of growth for the oil market remains the expectation that OPEC+ will agree to reduce production by 10 million barrels. Trump's comment reduces the likelihood of a cartel compromise at a meeting scheduled for Thursday, April 9th.

As a result, following the movement in the price of oil after Trump’s comments, we observed a weakening of the CAD. While the oil price was rising we saw a weakening of the USD/CAD currency pair and we can count on a bigger decline in the quotes of this currency pair if there is a further increase in oil prices. This is only possible if an OPEC+ agreement is reached.

The above review is not a direct guide to trading, and can only be classed as recommendations.
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EU ministers fail to agree coronavirus economic rescue

The night vigils of the finance ministers of the EU member countries (Eurogroups), which lasted as long as 16 hours in the format of a video conference, did not bring results. Participants could not agree on the final text of the plan to save the national economies affected by the consequences of the coronavirus epidemic.

It was assumed that an unprecedentedly huge amount of half a trillion euros would be allocated to support businessmen, farmers and those who were left without work.
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Berlin is not ready to take on the debt burden of the Southerners. The pressure on Germany is increasing. We see that Spain and Italy have already changed the tone in the negotiations, more and more insistently demanding help from the Germans.
Eurogroup talks on anti-crisis economic support will continue tomorrow - April 9th. And, perhaps, the current situation will be the main test of strength for the European Union.
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US has concluded an OPEC deal

Today Donald Trump said that the United States is unlikely to agree on a decrease in oil production coordinated with OPEC+, as American oil companies have already reduced it. Trump also expressed hope that the OPEC participants will be able to agree on everything, otherwise he has “a lot of interesting options.”
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- “I don’t think so. We have already reduced US oil production. We are very market oriented. If you look at Texas, North Dakota, they have already reduced some of the other states that are successfully working on this. They automatically reduced them.”
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As we expected, a natural reduction in US production (already by 600 thousand barrels, and expansion to 1.6 million barrels by the end of the year) will become America's conditional participation in the new OPEC+ deal. They seemed to have escaped political defeat, and at the same time, the oil showdown came to an end. We forecast an increase in the cost of American oil (#USOIL is available for trading with us) to $45-50 by the end of 2020.
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UK economy struggled before coronavirus crisis escalated

On Thursday official data showed that the UK economy was almost stagnant for the three months preceding February, before the coronavirus or COVID-19 crisis led to growth in the country and also pushed it towards what is likely to become severe recession.
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Such data must be interpreted as lagging. Collecting statistics for the previous quarter of course works. Bank of England is guided by these indicators and builds its monetary policy in ordinary conditions, but not in the current stressful situation. The effect of #covid19 helped to cross out all the past data and now we start everything from scratch. The best opportunities for earning, which have not existed for at least 20 years, are opening up right now.
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Dollar heads for weekly loss on Fed move, easing virus fears

The dollar is heading for a weekly decline on Friday, as the new US Federal Reserve loan program for small companies and signs of slowing the spread of coronavirus infections have led to a decrease in demand for this safe haven asset.

The pound rose against the dollar and the euro as markets breathed a sigh of relief after British Prime Minister Boris Johnson left intensive care after hospitalization due to persistent symptoms of COVID-19.

Currencies from oil-producing countries are also holding up against the US currency, but the outlook remains uncertain due to doubts that the deal between OPEC and its allies for a record reduction in oil supplies will be enough to offset the drop in global fuel demand.

Risk sentiment has been steadily improving this week due to preliminary signs of a pandemic slowdown in hot spots in the U.S. and Europe, but some analysts remain cautious, given that little is known about the virus and many countries continue to deal with the huge economic damage caused by the outbreak.

In relation to the euro, the dollar was at the level of 1.0939 dollars for the last time with a weekly decrease of 1.35%.

Trading on this day is likely to be sluggish, as financial markets in Australia, Hong Kong, Singapore, the UK and the US are closed on Good Friday.
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Market Watch

How OPEC+ saved the oil market


Today's review will begin with the fact that for most traders and investors, today is a public holiday. Australia and New Zealand were closed in connection with the celebration of Good Friday, which will then be followed by Europe, and the United States. As a result, today’s trading session will consist of thin liquidity, which, in turn, may be accompanied by the appearance of very strong price movements due to lack of liquidity in the market.

Most currency pairs remain in a narrow trading range, while the oil market is completely closed. Nevertheless, it remains the most talked about market, due to the significant volatility in price from Monday to Thursday.

OPEC+ agreed to reduce oil production by 10 million barrels, which was is in line with expectations. Nevertheless, this is not enough to balance the supply and demand, which has already led to a fairly strong collapse in oil prices. Let me remind you that a number of analysts and economists currently state that at current production levels, the oil market is oversupplied by 30 million barrels per day, as a result, a decrease in oil production by 10 million barrels per day is not able to compensate for the imbalance that has appeared.

Given all this, the oil market may open on Monday with a strong bearish gap. But much will depend on the position of the United States and whether they are ready to reduce their own production. Indeed, OPEC + refers to the need for the United States and Canada to also cut production by another 5 million barrels.

And now let's move on and begin analyzing the AUD/USD currency pair.

One of the fundamental factors for buying this pair was the fact that China resumed business activity in the manufacturing sector, which, in turn, contributes to an increase in demand for raw materials. Let me remind you that Australia is one of the main suppliers of raw materials for China. As a result, after the breakdown of the resistance level of 0.6200, it was decided to open a deal to buy.

Buy 1 lot from 0.6210, Take Profit 0.6310, Stop Loss 0.6185. I will draw your attention to the fact that the level of 0.6310 has been a technical level of resistance since March 13. The profit on this transaction amounted to $1000, while the risk was only $250.

The above review is not a direct guide to trading, and can only be classed as recommendations.
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EU ministers agree on a 540 billion euro crisis package

- The head of the Eurogroup, the Minister of Finance of Portugal, Mario Centeno, said that 100 billion euros will go to subsidize wages so that companies can reduce working hours, not jobs. In addition, the European Investment Bank (EIB) will expand lending to companies by €200 billion, while the European Stability Facility (ECM) fund will provide governments with €240 billion of cheap loans.
- It is noted that the package of measures taken will increase financial support for the economies of the EU countries in a pandemic to 3.2 trillion euros ($3.5 tron), which is the largest anti-crisis program in the world.
- An agreement was reached after Germany and France managed to overcome the opposition of the Netherlands, which insisted on adding economic conditions to the emergency loan for governments experiencing the effects of the pandemic, and convinced Italy that the bloc would show solidarity.
- At the same time, the use of joint debt to finance recovery is not mentioned - a point that Italy, France and Spain insisted on, but opposed by Germany, the Netherlands, Finland and Austria.
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〽CBA recommended buying euro against the dollar with a target at 1.1600 〽

The stimulus package and credit lines through ESM adopted the day before will help restore the eurozone economy faster.

Australia's largest financial conglomerate, Commonwealth Bank of Australia, recommended buying the euro against the dollar on expectations that the eurozone’s economic response to the coronavirus would provide financial stability in the region.

The agreed package of support measures includes a special credit line for eurozone countries through the European Stability Mechanism (ESM). For investors, this is a signal that thanks to the ESM, countries now have access to sufficient liquidity and are able to prevent the destabilizing expansion of government bond yield spreads.

The new stimulus package along with previously announced tax and fiscal support methods will lead to a faster recovery in the region than previously anticipated.

This will allow the euro/dollar to return to a fair price of about 1.1600, according to Commonwealth Bank of Australia.

The euro/dollar on Monday morning, April 13, was trading at 1.0940. The level of 1.1600 was last seen in this currency pair in October 2018.
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📆 Economic calendar for the week 📆

On April 12, OPEC met in an expanded format. As a result, the OPEC+ countries agreed to reduce oil production by 9.7 million. The deal will last two years. Given the expanded OPEC++ agreement, the total reduction in production in the world may reach about 19–20 million bpd.

On the eve of spring meetings the Head of the IMF warned that this year the global economy will face the deepest recession since the Great Depression, in addition the uncertainty around the duration of the crisis caused by the epidemic means that everything can end even worse.
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Weekly calendar:
04/13/2020, Monday
🥳 Catholic Easter Holiday

04/14/2020, Tuesday
🌍 IMF reports on international financial stability and global economic outlook

04/15/2020, Wednesday
🌍 G20: virtual meeting of finance ministers and central bank governors
🇺🇸 Retail Sales (March), forecast -8% m/m
🇺🇸 Industrial Production (March), forecast -4.2%
🛢 US Crude Oil Reserves
🇨🇦 Canada's #interestrate
🛢 IEA will publish a review of the oil market

04/16/2020, Thursday
🇦🇺 #labormarket Australia's March employment rate
🛢 OPEC will publish a review of the oil market

04/17/2020, Friday
🇨🇳 China's first quarter GDP
🇨🇳 March Industrial Production
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🇸🇦 Saudi Arabia renews the oil war 🇸🇦

Saudi Arabia continued the price war, despite the conclusion of a new deal to reduce oil production under OPEC+.

On Monday, April 13, Saudi state oil company Saudi Aramco officially announced May prices for the supply of raw materials. For Asia, which is the largest market in the world, they are reduced by $4.2 from the level of April.

The market is still full of oil, and Saudi Aramco shows that it is still ready to fight for its market share.
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GBP: Pound rising on expectations of #covid19 stabilization in Europe

On Tuesday, April 14, the pound against the US dollar reached a monthly maximum at 1.2576. Optimistic market sentiment gives support to the British currency, which implies that very soon the spread of infection in Europe will stabilize. At least this will happen sooner than in the USA.

New infections and new lethal outcomes began to decline both in the eurozone and in the UK. This may indicate that Covid-19 surrenders in Europe. This fact supports the euro and the pound.

In the next 3 days the British government will decide to extent the period of blocking the country. Foreign Minister Dominic Raab said the deadlines will most likely be extended until May 7.

GBPUSD has already recovered by more than 61.8% after falling from March highs at 1.3200 to lows at 1.1410.
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Market Watch
Quarantine until 2022


Today I will begin the review with the appearance of extremely shocking information from the Harvard School of Public Health. According to a study, or rather a report published yesterday, the United States may need to continue quarantine measures until 2022. This may be needed if the number of hospital beds for intensive care is not significantly increased or if a vaccine is not available.

As we see today, the demand for riskier assets as well as commodity currencies, has fallen dramatically. In the list of commodity currencies, I include AUD and NZD, since these countries are highly dependent on the export of raw materials to China. CAD is also sensitive to changes in oil prices. All these currencies have dropped today, but have since stabilized.

And now let us consider in more detail the situation in the oil market to understand the future movement, with which the CAD will be closely tied. Let me remind you that the deal between OPEC+ and other countries that support the organization will not compensate for the reduced demand. In support of this, the International Energy Agency (IEA) published a report that shows oil reserves are growing by 12 million barrels per day. All this contributes to lower oil prices and most likely the trend will continue in the coming days.

As a result, the CAD is likely to weaken, and the USD/CAD currency pair may also fall further, even taking into account the latest correction that has occurred. Thus, I do not exclude the possibility of a more powerful wave of growth and the pair's return to 1.4060–1.4080.

Moving to the American trading session, I will mention the upcoming publication of reports for retail sales figures and industrial production. If the numbers come in below expectations then pressure on USD will increase, thereby weakening the activity of sellers of the AUD/USD and NZD/USD, as well as buyers of USD/CAD.

Nevertheless, expectations of when the US and Europe can resume business activity remain more significant for the markets. After all, everyone understands that the economic situation is now catastrophic and will remain so until a significant reduction in quarantine measures happens around the world.

The above review is not a direct guide to trading, and can only be classed as recommendations.
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Australian Consumer Sentiment Drops Most in 47-Year History

According to a survey conducted by Westpac, consumer confidence in Australia declined in April most of all in the history of observations, after the outbreak of coronavirus turned from a serious problem into a full-blown pandemic.

The Westpac-Melbourne Institute consumer sentiment index fell -17.7% to 75.6 in April from 91.9 in March. This was the largest monthly decline in the forty-seven-year history of the survey, which brought the indicator beyond the lows of the global financial crisis.

This survey reflects the significant shocks associated with jobs and costs. Moreover, there was a collapse in confidence in the housing market.
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Bank of Canada maintains interest rate at 0.25%

The Bank of Canada left the key rate unchanged at the meeting on Wednesday and announced new bond purchase programs, saying that the coronavirus pandemic could provoke the strongest recession in the Canadian economy in the short term.
The aid to the Canadian provinces may amount to 50 billion Canadian dollars, plus another 10 billion will be given to key Canadian companies through a bond redemption mechanism.
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The Canadian regulator has adopted the habit of pouring money into the economy. The increase in the money supply should weaken #USDCAD, however, against the background of the trillions of dollars that the US Fed is pumping in, these are mere crumbs. Therefore, the factor of increasing the money supply can be safely ruled out.

In the bottom line, we have only positive drivers:
growing oil (within the framework of the year) and economic support from the Central Bank.
We confirm the forecast to reduce #USDCAD to 1.3000 in the next 4 months.
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