09.04.202009:22 Forex Analysis & Reviews: Trading plan for EUR/USD and GBP/USD on 04/09/2020

The currency market was almost perfectly calm yesterday. The quotes stood there as if rooted to the spot, despite the change in the rhetoric of mass agitation and disinformation, which rejoiced at the beginning of the week that the peak of the coronavirus epidemic has already passed and you can relax. But no, unfortunately, the number of new cases of infection with coronavirus is still increasing on the second day in a row. The record set on April 4, of course, is not broken, but it does not get any easier. At the same time, we received another confirmation yesterday that the steady trend to strengthen the dollar has not gone away. However, this moment remained out of sight of all kinds of mass agitation and misinformation, which are passionate about the fight against coronavirus. And we are talking about the debt market. This is very unnoticeable in the US market, as the yield on 30-year bonds rose from 1.320% to 1.325%. But previously, the systematic flow of capital from around the world to the United States was reflected primarily in short-term bonds for up to a year. In the best case, on securities with a maturity of up to five years. So, the yield on 30-year bonds is not entirely indicative. However, we see a further general disappearance of demand in Europe, whereas yield on 12-month Italian bonds jumped from 0.072% to 0.534%. And now it's hard to believe that recently the yield on Italian government debt securities was negative. As a result, the flight of capital continues perhaps, not at the same pace, since the bulk have already returned to the United States, but still.

Today will be somewhat more interesting in terms of macroeconomic statistics. For example, Great Britain has already reported sort of like, not bad data, since the pace of decline in industrial production slowed down from -2.9% to -2.8%. The trick is that they expected acceleration to -3.0%. So there is something to rejoice about. The recession is not as strong as expected. However, do not forget that the decline in industrial production with the United Kingdom has been going on for eleven consecutive months. Well, and the trade balance, suddenly turned out to be a deficit at 2.8 billion pounds instead of being surplus at 2.2 billion pounds. Therefore, do not be surprised at the fact that the pound is already declining.

Industrial Production (UK):

There is something to rejoice in Germany, since the trade surplus in February amounted to 20.8 billion euros. It was expected that it would be only 18.2 billion euros but suddenly, they found an additional 2.6 billion euros. It is likely that every month. Well, this happened due to a decrease in imports by 1.6% and an increase in exports by 1.3%. But Germany is not the whole of Europe, and it quite often happens that everything is directly very good in the largest economy of the euro area, but somehow, not so much in all the rest. For example, in Italy, a deepening decline in industrial production from -0.1% to -3.2% is expected today which is from the data for February. So it is scary to imagine what will happen there in March with this industry itself.

Industrial production (Italy):

Of course, the most interesting will occur in the United States. We are talking about the publication of data on applications for unemployment benefits. By the way, as noted earlier, the dollar has already begun to rise in price. In many respects, this is a consequence of yesterday's placements of European debt securities. So to say, the interest is not big, so it is better to transfer money to where it will be better - by means of security. Oddly enough, the currency market clearly shows that, from the point of view of large investors, it is safest in the United States. It's just that all these investors come from North America themselves. And when horror is happening everywhere, people prefer to run away to where it seems more calm and safe. And as humans, we are arranged in such a way that we consider our own home as the safest place, but the horror in economic terms is just unprecedented. For two consecutive weeks, the number of initial applications for unemployment benefits broke all conceivable and unimaginable records. No records are expected in this column today. Although these very initial applications for unemployment benefits should be as much as 5,150 thousand, which, by current standards, is only slightly less than the record value set last week, amounting to 6,648 thousand. In any case,=, 200 or 300 were considered normal thousand initial applications per month three weeks ago. As they say, feel the difference. But without records anywhere, the repeated applications for unemployment benefits, which should already be 6,990 thousand, will take on the record-holder role. And this value should break the previous record set during the 2008-2009 crisis. Therefore, the situation in the United States labor market is more like a horror movie but strangely, this is what contributes to the strengthening of the dollar. Simply, many investors think seriously ahead. They are well aware that the American economy is a gigantic market. This means that if the Americans get worse and worse with work, then they will not have much money. Consequently, consumption will decrease, which will lead to a sharp reduction in the profits of producers, who will be forced to reduce the number of workers. But after all, all these manufacturers in their vast mass are located in other countries. In addition, we add protectionism to this after Donald Trump, and it turns out that to minimize the economic damage, the United States can impose even greater restrictions on imports. So it turns out that the unprecedented increase in unemployment in the United States signals even greater problems in the rest of the world and Washington's actions are aimed at ensuring that the recovery from such a serious slap begins with the United States. Perhaps exclusively in the United States. So investors are just fleeing in advance from where there will be incredibly interesting times soon.

Repeated Unemployment Insurance Claims (United States):

The euro/dollar currency pair continues to focus within the level of 1.0850, where there is an attempt to break once again. In fact, the level in this case is a variable point, since the main support remains coordinates 1,0775. It can be assumed that in the case of maintaining the mood and fixing the price lower than 1.0830, a movement towards 1.0775 will be possible in the near future.

The pound/dollar currency pair has been fluctuating since the end of last day within the variable range of 1.2370 / 1.2420, where the lower boundary was still broken. It can be assumed that the given mood will remain on the market in the direction of 1.2320-1.2280.