A dismal day!

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<p><strong>Eurozone April PMI numbers looked dismal</strong><span>, with lockdowns across Europe really hitting home this month. The manufacturing sector outperformed, but the reading still dropped to 33.6 from 44.5 in March. Similarly to Japanese numbers this morning, the <strong>services sector collapsed</strong> and the reading dropped to 11.7 from 26.4. </span></p>
<p><span>The hospitality and tourism sectors in particular have been hit and for tourism in particular there is no chance of a quick recovery. The declines were the steepest ever recorded and new business inflows collapsed. Markit reported that “expectations of output in the coming 12 months dropped marginally below the previous nadir in March, thanks to a new record degree of pessimism in manufacturing”. Job cuts accelerated and average prices fell at the sharpest rate since June 2009. Clearly the extent of the slump is pretty scary and will add to pressure on EU heads of states, who today will discuss stimulus measures designed to kick start the recovery once restrictions have eased sufficiently.</span></p>
<p><span> A large scale investment program financed through the European Investment Bank is expected, while the EU’s multi-annual budget although any real stimulus can also have a lasting effect once things get back to normal and when that will be depends to a large extend on virus developments, rather than a political will.</span></p>
<p><span>Additionally, the<strong> German GfK consumer confidence dropped to -23.4</strong> in the May reading from 2.3 in April. A dismal number again and indeed a series low that clearly reflects the impact of crisis measures and highlights that government efforts such as subsidised wages are not sufficient. <strong>The full breakdown is only available until April, but already signalled a collapse in business expectations and the willingness to buy as income expectations turn negative.</strong></span></p>
<p><a href="https://analysis.hotforex.com/wp-content/uploads/2020/04/2020-04-23_12-50-55.png"><img class="alignnone size-large wp-image-125671" src="https://analysis.hotforex.com/wp-content/uploads/2020/04/2020-04-23_12-50-55-1024×566.png" alt="" width="696" height="385" srcset="/wp-content/uploads/2020/04/2020-04-23_12-50-55-1024×566.png 1024w, /wp-content/uploads/2020/04/2020-04-23_12-50-55-300×166.png 300w, /wp-content/uploads/2020/04/2020-04-23_12-50-55-768×425.png 768w, /wp-content/uploads/2020/04/2020-04-23_12-50-55-1536×850.png 1536w, /wp-content/uploads/2020/04/2020-04-23_12-50-55-696×385.png 696w, /wp-content/uploads/2020/04/2020-04-23_12-50-55-1068×591.png 1068w, /wp-content/uploads/2020/04/2020-04-23_12-50-55-759×420.png 759w, /wp-content/uploads/2020/04/2020-04-23_12-50-55.png 1627w" sizes="(max-width: 696px) 100vw, 696px" /></a></p>
<p><span>Stock market sentiment was hit by the numbers and GER30 and UK100 are currently down -0.6% and -0.3% respectively. <strong>EURUSD</strong> has remained heavy, edging out a low at <strong>1.0783.</strong> This is a move outside the 5-day range <strong>(1.0810-1.0890).</strong> Hence with momentum indicators in the medium and long term remaining strongly negative and with the asset price in a descending triangle since February, a sustenance of a decline below <strong>1.0800</strong> could turn the attention March lows again. However we need to see a decisive daily or weekly candle below <strong>1.0770.</strong></span></p>
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<p><strong>Click </strong><a href="https://www.hotforex.com/en/trading-tools/economic-calendar.html"><strong>here</strong></a><strong> to access the HotForex Economic Calendar</strong></p>
<p><strong>Andria Pichidi</strong></p>
<p><strong>Market Analyst</strong></p>
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