Next 24 hours: Digesting another US jobless claims
Today’s report: Bad run of US data with jobless claims still to come
We come into Thursday with the Buck having enjoyed a run of outperformance. Some have attributed the US Dollar demand to flight to quality bids on the back of ongoing coronavirus fallout and a horrid bout of US economic data, while others attribute the price action to nothing more than a corrective adjustment after a broader period of Dollar outflow.
Wake-up call
- reopen economy
- BOE Tenreyro
- outlook worsens
- EURCHFSNB policy runs into tough times
- employment data
- BoC holds
- RBNZ Orr
- Investor confidence
- hard asset
- macro players
- more exposed
Suggested reading
- China’s Trillion-Dollar Missed Virus Opportunity, A. Trivedi, Bloomberg (April 16, 2020)
- Tackling the Pandemic in a Leaderless World, V. Kortekaas, Financial Times (April 15, 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
Germany has announced it will be allowing smaller shops to reopen next week, while schools will restart in early May. Meanwhile, Italy saw its lowest tally of new cases in four and a half weeks. On a sour note, deaths in France rose to a record. The Euro has come under a little pressure of late, mostly on the back of renewed US Dollar demand from flight to safety bids. Key standouts on the Thursday calendar come in the form of German inflation, Eurozone industrial production, US initial jobless claims, the Philly Fed, and US housing starts and building permits.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 back through 1.3000. Look for the major pair to hold up above 1.2000 on a monthly close basis for confirmation.GBPUSD – fundamental overview
Reports around the UK extending lockdown for another three weeks have rattled the Pound a bit. We've also seen broad based US Dollar demand on flight to safety bid. Key standouts on the Thursday calendar come in the form of US initial jobless claims, the Philly Fed, and US housing starts and building permits. We also get a speech from BOE Tenreyro on the topic of monetary policy during a pandemic.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 in sight, with rallies well capped above 110.00 and dips well supported below 104.00.USDJPY – fundamental overview
There has been a wave of Yen weakness into Thursday, after reports surfaced that coronavirus fallout in Japan is worsening. The government is now reportedly considering expanding the state of emergency to Kyoto. Key standouts on the Thursday calendar come in the form of US initial jobless claims, the Philly Fed, and US housing starts and building permits.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
Technical studies are in the process of unwinding, after the market traded down to its lowest levels since 2003. There is evidence of a longer-term bottom, though the market will need to break back above the December 2019 high at 0.7032 to take the immediate pressure off the downside.AUDUSD – fundamental overview
Aussie has come under pressure in recent sessions, on the back of broad based flight to safety bids into the US Dollar and an unwinding of currency hedges from investors who failed to secure the November 2024 ACGBs at yesterday's record bond syndication. On the data front, the Aussie jobs report surprised to the upside, which has helped to support the market into setbacks. Key standouts on the Thursday calendar come in the form of US initial jobless claims, the Philly Fed, and US housing starts and building permits.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 at 1.3665.USDCAD – fundamental overview
The Canadian Dollar came under quite a bit of pressure on Wednesday. The currency was already suffering from lower OIL prices and broad based demand for the US Dollar, before taking an added hit on the Bank of Canada policy decision. Though the central bank did leave rates on hold, it announced bond buying and did not produce forecasts given the highly unpredictable nature of things during the global pandemic. On the data front, Canada existing home sales fell by more than forecast. Key standouts on the Thursday calendar come in the form of Canada manufacturing sales, US initial jobless claims, the Philly Fed, and US housing starts and building permits.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 continue to be well supported in the days ahead, in anticipation of additional upside. Only a weekly close below 0.5500 would give reason for rethink.NZDUSD – fundamental overview
The New Zealand Dollar is under added pressure into Thursday, after RBNZ Governor Orr said he hasn't ruled out negative rates which are "not off the table" beyond the next 12 months. Orr estimated the QE program was the equivalent to 150bps of easing and the central bank would be able to increase QE when the government boosted borrowings. Key standouts on the Thursday calendar come in the form of US initial jobless claims, the Philly Fed, and US housing starts and building permits.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 have led to an overdue corrective bounce, but rallies should now be well capped ahead of 2900.US SPX 500 – fundamental overview
Although we've seen attempts at recovery in response to unlimited QE from the Fed and massive US stimulus, 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, 2012 high), 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 has felt the impact of global macro pressures, with the currency falling victim to broad based risk liquidation in Q1 2020. 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 mostly risk off backdrop, in light of Ethereum's higher sensitivity and correlation with risk themes.