Daily Market Outlook, April 29, 2020

<h2><span><strong>Daily Market Outlook, April 28, 2020</strong> </span></h2>
<p><span>Asian equities are up this morning, despite a mixed performance yesterday on Wall Street, as ‘risk on’ continues to be the prevailing mood in the market. The oil price is modestly higher with Brent crude around $21bbl. France has outlined a plan to gradually ease lockdown restrictions from 11th March. The Australian PM said that easing of restrictions was “not too far away”. However, Germany is reported as likely to extend its global travel warning to 14th June. The credit rating agency Fitch has downgraded Italian debt to BBB- (one level above junk), on concerns about the impact of the covid19 pandemic.</span></p>
<p><span>The US Federal Reserve has already made some major changes to monetary policy to combat the economic effects of the covid-19 pandemic. Those included cutting interest rates to virtually zero and promising unlimited asset purchases. With financial conditions now looking more stable, today’s policy update may see the Fed stand pat. A relatively minor tweak to the Fed’s asset purchase programme policy is possible and other policy options will be discussed but the most likely outcome is that policy is left unchanged for now while further action is promised if necessary. Nevertheless, there will still be a number of things to look for in both the Fed’s press statement and Fed Chair Powell’s press conference including its thinking about the likely timing and pace of the economy’s rebound. Most significant for markets in the near term, may be any comment on the Fed’s immediate plans for the size of its QE programme. </span></p>
<p><span>Ahead of the Fed update, the Q1 US GDP release will provide an indication of the initial economic impact of the pandemic. We expect a 4% annualised decline due to the slump in activity in March as the lockdown came into effect. The decline in Q2 GDP is likely to be much greater. </span></p>
<p><span>The EU Commission will release its April measures of consumer and business confidence, which are expected to have registered very sharp declines. Also in the Eurozone, German April CPI data will provide some hints of tomorrow’s inflation reading for the region as a whole. We expect a big drop due in part to the slump in oil prices. </span></p>
<p><span>Very early Thursday, China April PMI data will give some insight into how swiftly the economy is recovering now that lockdown restrictions are being eased. Both the manufacturing and non-manufacturing indices moved back above the 50 expansion level in March after recording multi-year lows in February. Markets will be looking for both to have stayed above 50 his month. </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><b>1.0800 (1BLN), 1.0810 (400M), 1.0815-20 (1BLN), 1.0865 (1.1BLN)</b></li>
<li><span>GBPUSD: 1.2415 (270M)</span></li>
<li><span>USDJPY: 107.30 (555M), 107.50 (231M)</span></li>
<li><span>AUDUSD: 0.6435 (800M), </span><b>0.6450 (1.8BLN)</b></li>
</ul>
<h3><b>Technical &amp; Trade Views</b></h3>
<p><img class="aligncenter size-full wp-image-42614" src="http://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.39.48.png" alt="" width="1503" height="650" srcset="https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.39.48.png 1503w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.39.48-300×130.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.39.48-1024×443.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.39.48-768×332.png 768w" sizes="(max-width: 1503px) 100vw, 1503px" /></p>
<p><b>EURUSD (Intraday bias: Bearish below 1.09 targeting 1.0630, Bullish above 1.09 targeting 1.1050 )</b></p>
<p><span>EURUSD From a technical and trading perspective, 1.09 remains pivotal, a close above 1.09 would open a test of 1.1050. A continued failure to overcome the 1.09 hurdle will likely see prices grind lower to retest and breach last week’s lows en route to the 1.0630 target. UPDATE EURUSD continues to rotate just above the weekly pivot at 1.08, as 108 continues to support we may see a squeeze higher to test the pivotal 1.09, Note the momentum study is threatening a breach its bearish channel UPDATE Overnight FX options now expire at 10 a.m. Thursday New York, so they capture Wednesday’s Federal Reserve rate decision, with their pricing consequently reflecting the perceived FX reaction. Option prices are determined by implied volatility; the higher that is, the more actual volatility holders will need to generate profit. The difference in price since overnight expiry captured the Fed and the actual cash premium/break-even for a simple straddle will offer clues on expected FX reactions. EURUSD overnight implied volatility is now 13.0 from 10.0 tame considering expiry also captures Thursday’s European Central Bank announcement. The premium/break-even is now 59 from 46 pips in either direction.</span></p>
<p><img class="aligncenter size-full wp-image-42613" src="http://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.32.36.png" alt="" width="2153" height="1207" srcset="https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.32.36.png 2153w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.32.36-300×168.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.32.36-1024×574.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.32.36-768×431.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.32.36-1536×861.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.32.36-2048×1148.png 2048w" sizes="(max-width: 2153px) 100vw, 2153px" /></p>
<p><b>GBPUSD (Intraday bias: Bullish above 1.22 targeting 1.28)</b></p>
<p><span>GBPUSD From a technical and trading perspective, a pivotal test of the daily descending trendline is underway. A failure to sustain a breach of 1.2470 would concern the near term bullish bias suggesting another leg lower to test support back towards 1.2150 UPDATE caution counselled as the bearish momentum channel remains intact and could forewarn some more weakness ahead, trade through yesterday’s highs will open a 1.2650 test</span></p>
<p><img class="aligncenter size-full wp-image-42615" src="http://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.35.25.png" alt="" width="2153" height="1209" srcset="https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.35.25.png 2153w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.35.25-300×168.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.35.25-1024×575.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.35.25-768×431.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.35.25-1536×863.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.35.25-2048×1150.png 2048w" sizes="(max-width: 2153px) 100vw, 2153px" /></p>
<p><b>USDJPY (intraday bias: Bearish below 109 targeting 1.0465)</b></p>
<p><span>USDJPY From a technical and trading perspective, range contraction persists,albeit with a downside bias, a breach of 106.80 should inject downside momentum. A topside breach of 108 would delay donside objectives opening a retest of range resistance above 109 before lower again</span></p>
<p><img class="aligncenter size-full wp-image-42616" src="http://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.36.16.png" alt="" width="2157" height="1208" srcset="https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.36.16.png 2157w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.36.16-300×168.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.36.16-1024×573.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.36.16-768×430.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.36.16-1536×860.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.36.16-2048×1147.png 2048w" sizes="(max-width: 2157px) 100vw, 2157px" /></p>
<p><b>AUDUSD (Intraday bias: Bullish above .6250 targeting .6700)</b></p>
<p><span>AUDUSD From a technical and trading perspective, as .6250 now acts as support look for a grind higher to set up a test of the pivotal .6430/90 area. A close through here sets bullish sights on the equality objective at .6695. Only a decline back though .6250 would concern the bullish bias. </span></p>
<p><img class="aligncenter size-full wp-image-42617" src="http://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.37.31.png" alt="" width="1954" height="1106" srcset="https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.37.31.png 1954w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.37.31-300×170.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.37.31-1024×580.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.37.31-768×435.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-29-08.37.31-1536×869.png 1536w" sizes="(max-width: 1954px) 100vw, 1954px" /></p>
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