Daily Market Outlook, April 6, 2020
<h2>Daily Market Outlook, April 6, 2020</h2>
<p><b>A slowdown in the rate of covid-19 related fatalities has supported a strong rebound in the Asian equity market</b><span>. All major indices across the Asia Pacific are trading higher this morning, while 10yr US Treasury yields are around 3bp higher from Friday’s close.</span></p>
<p><b>Initially on the open, oil prices fell as reports of a stalemate between Russia and Saudi Arabia cast some doubt over a potential output cut</b><span>. The OPEC+ meeting that was scheduled for today has been pushed back to Thursday, with the pressure building on the US to also partake in production cuts, in order to see through an agreement. Sterling, meanwhile, is trading a little below its Friday close levels following reports of UK PM Johnson being hospitalised.</span></p>
<p><b>As the number of reported cases of covid-19 and related deaths continues to rise, albeit at a slower pace</b><span>, government’s remain focused on what measures are still likely to be needed to tackle its spread and its economic damage. </span></p>
<p><b>Across Europe, the debate around how best to use the policy tools</b><span> available through the European Stability Mechanism (ESM) continued to be discussed, with EU finance ministers set to meet via a video call tomorrow. Ahead of which, the euro area Sentix investor confidence survey for April will provide a timely reminder of the need for further action. March’s report saw the headline balance of the survey drop by almost twelve points to -17.1, a near seven-year low. However, the April report should show a further significant deterioration, reflecting the fact that more euro area countries are in lockdown mode. Consensus expectations are centred on a decline to -37.5 in April, close to the all-time low of 42.7 set during the global financial crisis.</span></p>
<p><b>In the UK the March release of the UK construction PMI</b><span> is likely to see the survey follow its manufacturing and services counterparts by falling sharply. Anecdotal reports suggest that a lot of activity in the sector continued despite the UK entering lockdown on the 20</span><span>th</span><span> March, suggesting that the fall is likely to be less than that seen in services but more than that seen in manufacturing (given the positive bias to that survey from supply chain disruptions). </span></p>
<p><b>Overnight, the Reserve Bank of Australia is expected to keep policy on hold </b><span>at its first meeting since it cut interest rates to 0.25% and announced QE at its emergency meeting on the 19</span><span>th</span><span> March.</span></p>
<p><b>CFTC positioning shows asset managers and noncommercial accounts deepening their implied short USD bias</b><span>, but only to a small extent, up to last week. However, leveraged accounts increased their net implied USD longs. The investment community appears uncertain over the EUR prospects, but short term players are moving against the AUD, GBP and JPY, either cutting existing long positions, or deepening shorts.</span><b> </b></p>
<p><b>In the FX space, after a strong take-up rate of the Fed swap facilities at the various central banks over the past two weeks</b><span>, the USD funding shortage issue probably is finally put to rest over the second half of last week. JPY basis normalized, while EUR basis probably overcompensated. G10 and EM FX vols are also normalizing. Note however, that ongoing normalization of the FX space now coincides with USD strength, rather than USD weakness. Elsewhere, the VIX is also easing lower. Overall, the financial markets have calmed down considerably</span></p>
<h3><b>Today’s Options Expiries</b><span> for 10AM New York Cut (notable size in bold)</span></h3>
<ul>
<li><span>EURUSD: </span><span>1.0760 (221M), 1.0805 (333M),</span></li>
<li><span>GBPUSD: </span><span>1.1800 (250M), 1.2310 (181M)</span></li>
<li><span>USDJPY: </span><b> </b><span>107.50 (670M), 108.00 (260M)</span><b>, 108.60 (1.7BLN)</b></li>
</ul>
<h3><strong>Technical & Trade Views</strong></h3>
<p><b>EURUSD (Intraday bias: Bearish below 1.09 bullish above)</b></p>
<p><span>EURUSD From a technical and trading perspective, prices continue to rotate around the equality objective at 1.08, however, without a sustained break of 1.09, newly minted longs may throw in the towel exposing bids and stops below 1.0750, with bears likely to press for a retest of March lows. On the day only a close above 1.0915 would suggest stabilisation.</span></p>
<p><img class="aligncenter size-full wp-image-41298" src="http://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-07.59.46.png" alt="" width="2058" height="1222" srcset="https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-07.59.46.png 2058w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-07.59.46-300×178.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-07.59.46-1024×608.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-07.59.46-768×456.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-07.59.46-1536×912.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-07.59.46-2048×1216.png 2048w" sizes="(max-width: 2058px) 100vw, 2058px" /></p>
<p><b>GBPUSD (Intraday bias: Bullish above 1.22 neutral below)</b></p>
<p><span>GBPUSD From a technical and trading perspective, a move back through 1.22 would suggest a broader corrective phase to unwind near term overbought momentum, 1.20/1.1950 will be pivotal this week, if bulls fail to defend this area, w deeper decline could ensue to test bids and stops below 1.17</span></p>
<p><img class="aligncenter size-full wp-image-41299" src="http://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.02.50.png" alt="" width="2057" height="1219" srcset="https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.02.50.png 2057w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.02.50-300×178.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.02.50-1024×607.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.02.50-768×455.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.02.50-1536×910.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.02.50-2048×1214.png 2048w" sizes="(max-width: 2057px) 100vw, 2057px" /></p>
<p><b>USDJPY (intraday bias: Bearish below 110 bullish above)</b></p>
<p><span>USDJPY From a technical and trading perspective, double bottom delays downside objective with a whipsaw back to 110 before lower again. Through 107 would suggest downside targets are directly in play</span></p>
<p><img class="aligncenter size-full wp-image-41300" src="http://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.04.08.png" alt="" width="2068" height="1219" srcset="https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.04.08.png 2068w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.04.08-300×177.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.04.08-1024×604.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.04.08-768×453.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.04.08-1536×905.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.04.08-2048×1207.png 2048w" sizes="(max-width: 2068px) 100vw, 2068px" /></p>
<p><b>AUDUSD (Intraday bias: Bullish above .5950 bearish below)</b></p>
<p><span>AUDUSD From a technical and trading perspective, defence of .5950 can set a platform for a move higher to test .6400. However, a failure at .5900 will open a deeper decline to test .5650</span></p>
<p><img class="aligncenter size-full wp-image-41301" src="http://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.07.31.png" alt="" width="2056" height="1221" srcset="https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.07.31.png 2056w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.07.31-300×178.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.07.31-1024×608.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.07.31-768×456.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.07.31-1536×912.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-06-08.07.31-2048×1216.png 2048w" sizes="(max-width: 2056px) 100vw, 2056px" /></p>
<p> </p>
<p><i><span>Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.</span></i></p>
<p><i><span>High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 70% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.</span></i></p>
<p>The post <a rel="nofollow" href="https://blog.tickmill.com/tech-analysis/daily-market-outlook-april-6-2020/">Daily Market Outlook, April 6, 2020</a> appeared first on <a rel="nofollow" href="https://blog.tickmill.com">Tickmill</a>.</p>
Leave a Comment