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The decline in the US economy, according to the results of the first quarter, did not help the euro, and it continued to lose its position. Which is largely due not to the GDP itself, but to other statistics on the US economy.
The final GDP data showed that the US economy contracted by 5.0% for the first quarter, which is slightly worse than the preliminary estimates showed. They gave a decline of 4.8%. However, we are talking about quarterly data. On an annualized basis, there is no talk of any recession, as the pace of economic growth has only slowed down from 2.3% to 0.3%. Of course, this is not a reason to rejoice and say that there is no crisis yet. After all, you need to take into account the simple fact that the decline in GDP began in many respects due to the introduction of restrictive measures, because of the epidemic of the coronavirus. And introduced only at the very end of the first quarter. And during this time, the recession was incredibly impressive. But due to the short time, in annual terms, this was not reflected so clearly. So a full-fledged recession, that is, a decline in GDP in annual terms, will be recorded already in the second quarter. In addition, the final GDP data could not cause the dollar to sharply weaken, since they did not differ too much from the preliminary estimates that have long been taken into account by market participants.
GDP (United States):
But orders for durable goods have become the main reason why the euro is weakening, as they grew by 15.8%. And this despite the fact that growth was projected as much as 8.5%. It should be noted that this is the most impressive growth in orders since July 2014, when they grew by 23.2%. There was a huge decline in orders in the previous two months, which is a direct reflection of the economic slowdown and an unprecedented increase in unemployment. But precisely for this reason, the recorded growth is an extremely positive factor, as it indicates a gradual recovery in consumer activity. After all, following the growth of orders, the growth of both industrial production and retail sales will inevitably follow.
Durable Goods Orders (United States):
Pleased with the data on applications for unemployment benefits. The initial applications came out slightly worse than forecasts, and their number decreased from 1,540,000 to 1,480,000, and not to 1,380,000. However, the number of repeated applications fell below 20 million, from 20,289,000 to 19,522,000. While it was expected to decrease to only 20,100,000. And although the figures are still terrifying, the dynamics is purely positive. If this trend continues, then we can talk about the gradual restoration of the labor market.
Repeated Unemployment Insurance Claims (United States):
The macroeconomic calendar is largely empty today, so market participants can only further play out yesterday's macroeconomic data, which means that it is quite possible to continue the inertial weakening of the single European currency. Even the projected growth in lending in Europe will not affect investor sentiment. These data are almost always ignored. Nevertheless, an acceleration in the growth of consumer lending is expected from 3.0% to 3.1%. The growth rate of corporate lending should accelerate from 6.6% to 7.2%.
Corporate Lending (Europe):
Data on personal income and expenses in the United States, which also have extremely limited influence, are released. In any case, personal income should decrease by 5.6%, while expenses can grow by 9.5%. And this is not strange, since everything was exactly the opposite in the previous month, and incomes grew, and expenses were reduced. So nothing supernatural happens with expenses and incomes. Unless you take into account the scale of these very changes that are really out of the ordinary. However, given what catastrophic events occurred, and continue to occur, in the labor market, it is quite possible to understand such fluctuations.
Personal Income (United States):
From the point of view of technical analysis, we see a rapid recovery process, on the basis of which the quote managed to come close to the range of 1.1180 (1.1190), where there was a stop and, as a fact, a pullback followed by stagnation within 1.1210/1.1230. Speculators' desire for action is visible with the naked eye, and therefore volatility has a consistently high rate.
Considering the trading chart with respect to the daily period, you can see the rebound's process from the area where trade forces interact at 1.1440/1.1500, where the quote is still at the conditional peak of the earlier inertial movement 1.0775 ---> 1.1422.
We can assume a temporary price fluctuation within the values of 1.1210/1.1230, where the concentration of short positions is still high, which does not exclude the possibility of the price returning to the 1.1180/1.1190 area. At the same time, due to the high speculative interest, the tactics of local positions remain relevant, thus, work on the breakout of established boundaries can be profitable in this period.
Specifying all of the above into trading signals:
- We consider purchase positions higher than 1.1235, with the prospect of a move to 1.1255.
- We consider selling positions lower than 1.1205, with the prospect of a move to 1.1190-1.11180.
From the point of view of a comprehensive indicator analysis, we see that the indicators of technical instruments with respect to hourly and daily periods have a sell signal, due to the recovery process.
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