Today’s report: Don't expect much reaction to today's US jobs report
Investor sentiment remains weighed down overall into the end of the week, as coronavirus fallout continues to cripple global markets. Thursday’s shocking jump in US initial jobless claims to a gargantuan record print of 6.6 million, is only making the reality of the impact of the pandemic that much intense.
Wake-up call
- retail sales
- services PMIs
- Fiscal plan
- EURCHFSNB policy runs into tough times
- retail sales
- OIL rebound
- Dovish comments
- Investors worried
- hard asset
- macro players
- more exposed
Suggested reading
- This Silent Job Killer Is an Underrated Threat, T. Duy, Bloomberg (April 2, 2020)
- Inherent Uncertainty, R. Seawright, Financial Times (March 31, 2020)
Chart talk: Technical & fundamental highlights
Choose pair:
EURUSD – technical overview
A higher low is now sought out above the multi-year low from 2017, ahead of the next major upside extension. Look for the major pair to be well supported into dips ahead of the next big run towards the 2019 high at 1.1570. Ultimately, only a weekly close below 1.0700 would compromise this outlook.EURUSD – fundamental overview
The coronavirus fallout has not been kind to Europe, with both Italy and Germany extending their respective lockdown periods, and Spain recording fatalities beyond the 10k mark. On Thursday, the German Economic Minister warned the economy would contract more than 5% this year. Key standouts on the Friday calendar include services and composite PMI readings out of Germany, and the Eurozone, Eurozone retail sales, the monthly employment report out of the US, and US ISM non-manufacturing.EURUSD - Technical charts in detail
GBPUSD – technical overview
The market has rebounded sharply, after collapsing to a +30 year low below 1.1500. This supports the longer-term constructive outlook, with a major bottom sought out ahead of the start to a big run to the topside. Look for the major pair to hold up above 1.2000 on a monthly close basis for confirmation.GBPUSD – fundamental overview
Data out of the UK this week has come in largely as expected, with Tuesday's GDP reads followed up by Wednesday's consensus manufacturing PMIs. Overall, the Pound has been better bid, mostly on the back of more favourable yield differentials with the US Dollar in the aftermath of the Fed's decision to commit to unlimited QE. The Pound is also the only major currency that isn't as stressed about the prospect of currency appreciation. The government will be expanding its loan guarantee program, and will also be announcing changes to programs for small companies. Key standouts on the Friday calendar include services and composite PMI readings out of the UK, the monthly employment report out of the US, and US ISM non-manufacturing.USDJPY – technical overview
We're seeing a pickup in volatility in the major pair, with the market swinging wildly through the upper and lower bound of a massive triangle. Still, there is no clear direction insight, with rallies well capped above 110.00 and dips well supported below 104.00.USDJPY – fundamental overview
We continue to see Yen demand on dips, with the price action attributed to traditional correlations between the Yen and flight to safety. Coronavirus fallout concerns are a primary driver behind the downturn in sentiment and concurrent Yen demand. Japan Economic Minister Nishimura said the government will be deciding on a fiscal stimulus plan early next week. Key standouts on the Friday calendar include the monthly employment report out of the US, and US ISM non-manufacturing.EURCHF – technical overview
The market remains very well capped into offers and the medium-term picture continues to favour the downside. A break back above 1.0710 would be required to take the immediate pressure off the downside. Technicals are however looking extended and the market should be well supported ahead of 1.0500.EURCHF – fundamental overview
The SNB remains uncomfortable with Franc appreciation and continues to remind the market it will need to be careful about any attempts at trying to force an appreciation in the currency. But the SNB will also need to be careful right now, as its strategy to weaken the Franc is facing headwinds from a less certain global outlook, and from a US administration that has put Switzerland on its currency manipulator watchlist. Any signs of risk liquidation in 2020, will likely invite a very large wave of demand for the Franc that will put the SNB in the more challenging position of needing to back up its talk with action, that ultimately, may not prove to be as effective as it once was, given where we're at in the monetary policy cycle.AUDUSD – technical overview
Aussie has recently extended declines to its lowest levels against the Buck since 2003. At the same time, technical studies are looking stretched and any additional setbacks below 0.5500 should be a difficult task, at least over the coming months. Back above the December 2019 high at 0.7032 would however be required to take the immediate pressure off the downside.AUDUSD – fundamental overview
The Australian Dollar has pulled back from recent recovery highs, with the currency suffering from a resumption of risk off flow, as coronavirus fallout fears work back into the mix. Setbacks have however been less intense into Friday, with Aussie getting some help from a better than expected Aussie retail sales print and cross related demand for AUDNZD. Key standouts on the Friday calendar include the monthly employment report out of the US, and US ISM non-manufacturing.USDCAD – technical overview
An intense market rally has stalled out just ahead of the 2016 high. At this stage, there is risk for a more meaningful period of correction, with potential for setbacks to extend back down towards previous resistance turned support, in the form of the 2018 high.USDCAD – fundamental overview
The Canadian Dollar got a little boost from President Trump's Thursday tweet about an expected cut in oil production, based on his conversations with the Saudi crown prince. But this bid was sold into the rally, as market skepticism around the validity of the tweet circulated shortly after. Meanwhile, Canada's trade deficit came in below forecast. Key standouts on the Friday calendar include the monthly employment report out of the US, and US ISM non-manufacturing.NZDUSD – technical overview
There's a case to be made for a meaningful bottom, with the market looking quite extended after dipping below major psychological support at 0.5500. As such, look for setbacks to be well supported in the days ahead, in anticipation of sharp rebound. Only a weekly close below 0.5500 would give reason for rethink. Back above 0.6500 however, would be required to take the immediate pressure off the downside.NZDUSD – fundamental overview
The New Zealand Dollar has retreated off recent recovery highs, with the currency suffering from renewed global fear associated with coronavirus fallout. We've also seen added downside pressure in the currency on the back of the latest comments from RBNZ Governor Orr. The central banker said the RBNZ could continue to provide stimulus for a "long, long time", interest rates were going to remain low for a long time and "we've got various means to increase it if we need to." The RBNZ recently introduced QE measures into its monetary policy. Key standouts on the Friday calendar include the monthly employment report out of the US, and US ISM non-manufacturing.US SPX 500 – technical overview
Setbacks have been intense as the market puts in a longer-term top. The market has collapsed through the 2018 low, with the next major support coming in at the 2016 low around 1800. Extended readings warn of a corrective bounce, but rallies should now be well capped ahead of 2800.US SPX 500 – fundamental overview
Although we've seen attempts at recovery in response to unlimited QE from the Fed and a $2 trillion US stimulus package, with so little room for additional central bank accommodation, given an already depressed interest rate environment, the prospect for additional runs to the topside, on easy money policy incentives and government stimulus, should no longer be as enticing to investors. Meanwhile, tension on the global trade front, geopolitical risk, and ongoing worry associated with coronavirus fallout, should weigh more heavily on investor sentiment in 2020.GOLD (SPOT) – technical overview
The 2019 breakout above the 2016 high at 1375 was a significant development, and suggests the market is in the early stages of a bullish move that follows a multi-month consolidation. The next major level of resistance comes in around 1800 (measured move extension target), while in the interim, look for any setbacks to be well supported above 1500.GOLD (SPOT) – fundamental overview
The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about exhausted monetary policy, extended global equities, political uncertainty, coronavirus fallout, systemic risk and trade war threats. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.BTCUSD – technical overview
Setbacks should be very well supported ahead of the 2018 low, with a higher low sought out in favour of a bullish continuation back above the 2019 high and towards the record high from late 2017 further up. Ultimately, only a weekly close below 5,000 would compromise the constructive outlook. Back above 10,500 further encourages the bullish prospect.BTCUSD – fundamental overview
Bitcoin is finally feeling the impact of global macro pressures, with the new currency falling victim to broad based risk liquidation. However, despite the recent slide, there continues to be good demand from players looking out to the medium and longer term, who see Bitcoin as a safe haven, store of value asset.BTCUSD - Technical charts in detail
ETHUSD – technical overview
The market is in the process of attempting to establish a meaningful base after stalling out in the latter half of 2019. Look for setbacks to be well supported above the 2018 low, in favour of another big bounce, eventually back towards and through the 2019 high up at 363.ETHUSD – fundamental overview
While there is plenty of Ether demand built up, with so much optimism around prospects for the blockchain, given all of the development going on in the decentralised finance space, macroeconomics will likely play a negative role in 2020, with Ether expected to underperform in a risk off backdrop, in light of Ethereum's higher sensitivity and correlation with risk themes.