Daily Analytics from Fibo Group

🇸🇦 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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#MarketWatch
 
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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Neutral data from Australia's labour market

Australia's unemployment rate rose slightly in March to 5.2% from 5.1% in February. Total employment across Australia grew by 5,900 per month. All this was related to the part-time sector (an increase of 6400 people).

Because the data was collected in mid-March, it doesn't reflect the deplorable state of the labour market and the impact of mass quarantine on the Australian economy. We believe that this negative factor will make itself felt in future publications, contributing to an even smoother recovery of #AUDUSD.
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OPEC: reduced oil demand

- The OPEC monthly review published yesterday provides a forecast of oil demand this year. According to OPEC estimates, in the 1st quarter, demand fell by 6.75 million bpd. In the 2nd quarter, a collapse in demand is forecasted for another 6.22 million bps.
OPEC predicts the beginning of demand recovery in the 3rd quarter and the preservation of positive dynamics in the 4th quarter.
Generally the demand is forecasted to decrease by 6.85 million bpd.
- About the same data was published the day before by the International Energy Agency. According to the IEA, oil demand in April 2020 will fall by a record 29 million b/s, in May - by 26 million b/s, and in June - by 15 million b/s.
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In the next 2-3 weeks, oil prices will remain under pressure. The oil market will be supported by news about quarantine removal in countries with high oil consumption and other verbal interventions that will continue to be received in the media from officials of oil-producing countries.
Within the framework of the current year, the OPEC++ transaction will not be able to stabilize the oil market immediately and the effectiveness of the transaction will become noticeable only in the second half of 2020.
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China GDP: Bleak outlook for economic recovery post-virus

In March China showed a sharp recovery in industry while maintaining a deep failure in trade:

- Industry: -1.1% yy (expected -7.3% yy)

- Retail sales: -15.8% yy (expected -10.0% yy)

- Investments (from the beginning of the year): -10.8% yoy vs -8.6% in January-February

The data published today on China's GDP for the 1st quarter turned out to be slightly worse than forecasts (a decrease of 6.8% year-on-year).
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The dynamics of the development of the Chinese economy due to the negative impact of the coronavirus pandemic from January to March inclusive turned out to be negative for the first time since 1992 - in the first quarter China's GDP fell by 6.8%. This was reported on Friday by The National Bureau of Statistics (NBS) of China.
Such dynamics give us a signal that it will be quite difficult for other countries to restart their economies.
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US crude plummets 19% as coronavirus pandemic ravages oil demand

US oil prices fell on Monday during Asian trading as traders continued to worry about declining demand due to the coronavirus pandemic - analysts called the situation in the US 'quite terrible'.

May West Texas Intermediate oil contract prices fell nearly 19% to $14.84 a barrel. Earlier, WTI fell to $14.47 a barrel, the lowest level since mid-March 1999, when it was trading at just $14.40 a barrel. Meanwhile, futures for Brent crude fell 2.42% to 27.40 dollars per barrel.

Daniel Hines, ANZ told CNBC in the Squawk Box on Monday that one of the reasons for the crater in US crude prices was the upcoming expiration of the May futures contract, which should expire on Tuesday. The June WTI contract fell about 6% to $23.57 a barrel.
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📆 Economic calendar for the week 📆

WTI oil has fallen to a minimum since 1999 on concerns about a lack of storage facilities in the world. The dollar is strengthening while investors are preparing to publish important macro statistics this week.
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Weekly calendar:
04/20/2020, Monday
🇳🇿 New Zealand #inflation for the 1st quarter of 2020.

04/20/2020, Tuesday
🇺🇸 US New Home Sales in March, forecast -8.2% m/m;
🇬🇧 UK #unemployment in March.

04/20/2020, Wednesday
🇬🇧 UK #inflation for March;
🇨🇦 Canada #inflation for March;
🛢 US Crude Oil Reserves.

04/20/2020, Thursday
🇪🇺 Eurozone Manufacturing Purchasing Managers Index (#PMI) for April;
🇬🇧 UK Manufacturing Purchasing Managers Index (#PMI) for April;
🇺🇸 US Manufacturing Purchasing Managers Index (#PMI) for April.

04/20/2020, Friday
🇬🇧 S&P Global Ratings will publish UK rating;
🇺🇸 US Durable Goods Orders for March.
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Historical moment: oil at a negative price

The price of oil has fallen. To sell it, you need to pay the buyer. According to analysts, this story will go down in textbooks.

This night, the price of Texas WTI crude oil fell lower than in dollars per barrel for the first time in history, as traders on the ICE exchange in London have reported.

The price of WTI crude oil for May delivery on the New York Mercantile Exchange has turned negative for the first time in history. At 21:32 Moscow time it cost almost -$40 per barrel. This is what real delivery futures mean when, after expiration, you must accept the goods.

Apparently, at the moment there is nowhere to store oil at all. June futures are trading at $20; July futures are trading at $26.
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Unemployment in the UK rose before the coronavirus crisis

According to ONS, unemployment in the UK rose before the coronavirus crisis. The British labour market weakened three months before February, preceding the outbreak of coronavirus, despite a record number of employees.

The unemployment rate rose from 3.9% to 4.0%, the number of vacancies decreased for the tenth month in a row, and wages continued to fall from a peak in June last year, according to the Office of National Statistics. It is expected that the slowdown in the labour market will worsen, as workers will be laid off in the coming months, many elderly and young people will be forced to look for low-paid jobs.

The extension of the block last week is expected to trigger a new wave of layoffs. Despite all the deplorable situations, #GBPUSD shows confident signals for growth.
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Dollar’s long-term prospects turn gloomy

In March, the world reserve currency rushed up and reached multi-year highs even despite the collapse of stock markets and bonds close to disaster. A month has passed, the dollar is still strong and enjoys the status of a safe asset.

But some analysts and investors are sure that the trend will change soon due to the policies of the world central banks aimed at increasing dollar flows in the financial system. In addition, the US Federal Reserve lowered rates much lower than other central banks in large economies. This will also increase pressure on the dollar, experts are sure.

In the near future, the dollar is unlikely to become much cheaper, partly due to nervousness and uncertainty in the markets. Goldman Sachs analysts said they expect the dollar to rise against the euro in the short term. But the Fed’s aggressive reaction to the crisis could lead to a weakening of the US currency by the end of the year, said Mark McCormick, head of currency strategy at TD Securities.
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Market Watch
Doomsday in the oil market

This week has already gone down in history as the price of the May futures contract for US WTI oil fell below zero. The historical low was fixed below -$40 a barrel. Today, the June futures are trading at a record low of $6.5 per barrel.

The current situation can be explained by a huge oversupply supply and news that the largest oil storage facilities in the USA were almost full. Let me remind you that on Tuesday in an interview with Bloomberg, the financial director of the Rotterdam Royal Vopak NV, the world's largest independent oil storage operator, said that they had almost no free space for oil storage. Of course, other operators have a similar situation, which contributes to lower oil prices.

Against this background, we are witnessing a fairly strong weakening of commodity currencies, in particular the CAD. Thus, the USD/CAD currency pair, having strengthened by more than 250 points, reached the level of 1.4260. I would like to draw your attention to the fact that this growth was due to a weakening CAD, as the US dollar index remained basically unchanged.

Despite the issues in the oil market, which could lead to a series of bankruptcies in the oil and gas sector of the USA, Canada and a number of other countries, the demand for safe haven assets remains moderate such as gold where the price remains stable and we are seeing moderate growth after a pretty long decline. Also, the JPY remains quiet, which could indicate an increase in interest in safe haven assets or an escape from risk.

With all this yesterday, the Bank of America published an unexpectedly optimistic forecast for gold prices. The target for the next 18 months has been revised from $2,000 to $3,000, while the forecast for the average price for 2020 is close to current values - $1,695 and $2,063 in 2021. A prerequisite for the development of this scenario is the depreciation of currencies amid increasing risks for the largest central banks in the world. This forecast from Bank of America analysts can be interpreted as an extremely pessimistic forecast for the further development of the global financial crisis.

The above review is not a direct guide to trading, and can only be classed as recommendations.
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#MarketWatch
 
Australia's retail surge

The surge in toilet paper sales has led to a sharp surge in retail sales in Australia as a whole, with a record high. The growth rate in March accelerated to 8.2% compared with the previous month, according to preliminary data from the Australian Bureau of Statistics (ABS).

The growth rate in March was a record, which is explained by the rush demand for food and essential goods in isolation.

Although there is some concern that this indicator does not reflect the whole picture, the market perceives it as a signal for economic recovery. Recommendation - buy the #AUDUSD currency pair.
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USA: oil stocks up 15 million barrels per week

Commercial oil reserves in the US over the past week increased by 15.022 million barrels and amounted to 518.64 million barrels on April 17, according to the US Department of Energy.
- Moreover - tankers gathered off the coast of California. The volume of oil stored in tankers reached 20 million barrels. They have nowhere to go due to falling demand for raw materials.
- Gas prices in Europe continue to fall, updating the lows every day.
- Due to low oil prices, shale oil production in the USA by the end of the year will decrease to 10.1 million from 12.8 million bps at the beginning of the year, and in 2021-2022. reduced to 8.5 million b/s.
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UK PMI: sterling strengthens despite terrible data

The pound strengthened on Thursday, even after preliminary UK PMI indices for April fell well below even the most pessimistic forecasts, as market activity does not seem to depend on new data on the catastrophic economic consequences of the spread of coronavirus.

The PMI fell to a new all-time low of 12.9 from 36.0 in March. The magnitude of the collapse almost guarantees a huge recession in the fifth largest economy in the world and will add doubts that financial assistance from the government will quickly get to business.
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The survey doesn't really tell us anything more than what we already know from what we see from our windows today.
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Bank of Japan weighs unlimited government bond buying

Next week the Bank of Japan will discuss the transition to unlimited purchases of Japanese government bonds in response to the deep economic downturn caused by the coronavirus.

The Central Bank of Japan is currently aiming to increase its government bonds by approximately 80 trillion yen ($742 billion) per year. The transition to unlimited purchases puts the Bank of Japan on a par with the US Federal Reserve in terms of growth in government debt.

This decision led to a sharp surge in #USDJPY #EURJPY. In the future, this factor will contribute to smoothing and normalizing the dynamics of the national currency of the country of the rising sun.
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Market Watch
Record decline in business activity

The economic situation in the EU is rapidly deteriorating, significantly exceeding analysts forecasts. A report published on Thursday on a change in the level of business activity in Italy, France, Germany and Britain showed an unexpectedly strong deterioration in the situation. As a result, the risk of weakening EUR and GBP continues to increase.

So, with the opening of the European trading session, we are witnessing a weakening of the EUR/USD currency pair. Until the return of quotes above 1.0775, there is a risk of a further decline to 1.0650. The closest technical support level remains at 1.0720.

A similar situation with the GBP/USD currency pair - the lack of demand above 1.2370 led to the appearance of another round of selling. For a more powerful decline, an additional bearish fundamental factor for GBP or a very strong bullish factor for USD is needed. Let me remind you that today there is a lack of news to hit the market, therefore, trading activity may remain within a range.

Now let's move on to the oil market. After a record collapse at the beginning of this week, the bulls managed to regain some of their previously lost positions. At the same time, demand at the level of $18 per barrel remains very weak, since in the United States there is practically no room for storage of oil. All this led to a collapse. As a result, only a significant decrease in the production of "black gold" in the US can stabilize the market in the coming days or weeks.

The recovery in oil prices puts pressure on the USD/CAD pair, but sellers' activity remains weak including against the backdrop of a strengthening USD. Prior to the breakthrough of the technical support area 1.3990–1.4000, there is a risk of renewed growth to 1.4255. As a result, at the moment, selling pressure remain in the zone of increased risk.

We conclude today's review with an analysis of a deal to buy gold. After the breakdown and fixing the price above the technical resistance level of $1715, the trader placed a pending buy order at the level of $1715.0 with a volume of 1 lot. A Take Profit order was placed at the next resistance level - $1735. As you can see now, the price of gold has reached $1,760, which generated a profit of $2,000.

The above review is not a direct guide to trading, and can only be classed as a recommendation.
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#MarketWatch
 
PMI Indexes: April is the second month of a disaster

April PMI preliminary indexes released yesterday paint a picture of total disaster.
Life in the services sector in all major economies (preliminary PMIs are not published in China) practically stopped in April, especially in the Eurozone (forecasts for European countries are now the most dramatic in comparison with others).
However, in the USA these are record-low values in the entire history of polls.
▪️ In the industrial sector there is a recession, but here the depth of the recession is still less.
All hopes are that in May countries will slowly begin to ease quarantine restrictions. Fitch estimates that every month quarantine costs the global economy 2% of GDP.
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