Donald Trump announced last night that he would close the trip to Europe, which made the mood even more negative today, especially for European stock exchanges. They opened with even a lower declining portion, and in total, the German Dax30 index lost about 1,000 points today as the decline continued in the post-bearish gap European session. Treasury yields also remained largely under pressure, with 10-year yields falling by more than 15 basis points, but this time it didn’t stop the dollar from posting profits.
The decline in gold and the rise in the USD / JPY suggest that sentiment needs to improve, but this is not the case as stock markets and commodities continue to decline. Rather, it is the case of the USD, which is gaining ground after suffering significant losses over the past two weeks, especially against the euro. The ECB has not reduced its repo / deposit today, as almost all other major central banks have done, but they will increase the stimulus package, but I don’t think the money will force people to get to work when governments make a complete shutdown . , for good reason. The only way to quarantine the whole country (any country) in your home is about a month or two until the virus dies and then resumes the farm after the disaster.
The European session
- Industrial production in the euro area – In particular, manufacturing and industrial production have been in a difficult situation in the euro area over the last few years. The trade war was between the United States and China, but the whole world picked up the hit, and production in particular contracted deeply in the eurozone a year ago. Industrial production also declined in the last months of last year, but jumped higher in January. Below is the January report :
- Industrial production in the euro area in January is expected to be + 2.3% MoM + 1.5%
- December was -2.1%; Modified to -1.8%
- Industrial production WDA -1.9% YoY vs -2.9% expected
- Prior was -4.1%; Modified to -3.6%
- ECB meeting – The European Central Bank held its regular meeting earlier today. Forex calendars did not show interest rate cut expectations, but traders did after all major central banks aggressively cut interest rates recently. But the interest rate is already negative for the ECB and the BOJ, as well as for the SNB. Thus, the ECB left the refinancing rate unchanged at 0.0% and -0.50%, respectively. But they were said to step up incentives.
- ECB Lagarde press conference – The European Central Bank (ECB) has been meeting for some time. There were no expectations for interest rate cuts, but they could have brought surprise cuts, as other large banks did. They didn’t, but, Christine Lagarde’s speech sounded a little anxious today, but not as much as it should. Although they intensified the stimuli . In his statement, he made the following comments following the ECB’s interest rate decision:
- The virus causes severe shock
- The virus slows production and reduces demand
- He asks for help from the fiscal authorities
- Ambitions, a coordinated fiscal policy response are needed
- The ECB’s measures will facilitate the smooth flow of lending
- The ECB is ready to adjust all instruments
- The latest indicators point to a much worse outlook
- The necessary containment measures will adversely affect the activity
- Growth slowed before the virus erupted in manufacturing
- Growth is expected to regain grip in the medium term
- Growth is 0.8% in 2020, up from 1.1%, but ahead of the coronavirus
- The risks were “clearly” skewed to the disadvantage by 2020, namely 2021 as well
- He sees growth in 2021 at 1.3%, up from 1.4% a year earlier
- 1.4% in 2022, compared to 1.4% earlier
- The world is shutting down – First China closed most of the country, then Italy, South Korea and Japan, now all European countries are starting to shut down some parts. Ireland is officially announcing the closure of schools and restricting mass gatherings caused by the coronavirus. Irish Prime Minister Leo Varadkar announced:
- Schools and universities will be closed from tonight to March 29th
- Restrictions on mass gatherings and indoor gatherings
- Shops and cafes may remain open, but they need to look at how to operate social distance
- U.S. Unemployment Needs – Initial claims remain strong, but the market expects these numbers to increase in the future as businesses close. The sports world is at the forefront. There are a lot of employees who will be unemployed and working in the country scene.
- initial unemployment claims are 211 thousand and 220 thousand estimates
- 4-week average of 214,000 last week
- ongoing receivables 1722K vs 1733K estimate
- The 4-week average was $ 1,727,000 last week at 1,721.25k
- U.S. PPI Inflation Report – The U.S. PPI (Producer Price Index) report has been published for some time. PPI inflation has been rising recently, rising to 0.5% in January, but falling crude oil prices have made PPI negative.
- The US February PPI is expected to be -0.6% m / m vs -0.1%
- January was + 0.5%
- PPI YoY + 1.3% vs + 1.8% expected
- Coronavirus cases –Country,
CriticalTot cases /
1 million pop
China 80,796 +18. 3,169 +11. 62,826 14,801 4,257 56.1 Italy 12,462 827 1,045 10,590 1,028 206.1 Iran 10,075 +1,075 429 +75 3,276 6,370 120,0 S. Korea 7,869 +114. 66 +6. 333 7,470 54. 153.5 Spain 3,003 +726 84. +29. 189 2,730 126. 64.2 Germany 2,502 +536 5. +2 25 2,472 9. 29.9 France 2,281 48 12. 2,221 105 34.9 USA 1,380 +79 38 15 1,327 10. 4.2 Switzerland 867 +215 6. +2 4 857 100.2 Norway 713 +84. 1 712 131.5 Diamond princess 696 7 325 364 32 Japan 643 +4 16. +1 118 509 26. 5.1 Sweden 635 +135 1 1 633 2 62.9 Denmark 615 +101 1 614 2 106.2 The Netherlands 614 +111. 5. 2 607 1 35.8 United Kingdom 590 +130 10. +2 18. 562 8.7 Belgium 399 +85 3 1 395 2 34.4 Austria 302 +56 1 +1 4 297 1 33.5 Qatar 262 262 90,9
He is looking for vision
Mogorva EUR / USD
- The main trend continues to decline
- Retrieval is complete
- The 100 SMA acts as a resistor
- The ECB will increase the incentive
EUR / USD turned at 100 SMA
The EUR / USD has shown a significant rise in the last two weeks, despite the outbreak of the coronavirus in Europe, especially in Italy. The Italian economy has come to a standstill and the rest of Europe is coming, which is hurting the economy and is likely to go into recession, so the rise seemed strange. But the rise ended at 100 SMA (green) on the weekly time frame chart. Buyers have been crossing this moving average for a while, but that doesn’t quite count as a break because the candlestick hasn’t closed over. So EUR / USD couldn’t break the 10 SMAs and buyers seem to have given up. After all, it was a respectable look back, climbing from 1.07 deep to 1.15.
But the price turned around this week on Monday and has been falling since then. Today, the decline came to a significant point after the ECB announced that it would increase QE by € 120 billion a month and announce a new LTRO. The USD also played a role in this, as it has strengthened significantly these days, which is why this pair has a widespread bias.
There was no big panic today, but the mood remained negative after US President Donald Trump decided to close flights to Europe. Stock markets continued to decline, but shelters also turned lower. However, the euro is the biggest loser after the ECB decided to increase the stimulus package.