Daily Market Outlook, April 30, 2020 

<h2><span>Daily Market Outlook, April 30, 2020 </span></h2>
<p><span><strong>The global equity market has risen strongly (S&amp;P500 +3% yesterday) after news that Gilead Sciences’ remdesivir drug had shown positive results in government-run trials.</strong> Risk sensitive currencies have outperformed, with the NZD leading the way in the G10, and commodity prices have increased. </span></p>
<p><span><strong>The big news has been that Gilead Sciences’ remdesivir, a potential treatment drug for COVID-19, was revealed to have had positive results in placebo-controlled trials.</strong> The US National Institute of Allergy and Infectious Diseases (NIAID), which administered the trials, enrolled around 800 patients, with 31% seeing an improvement compared to placebo. Dr Fauci, who heads the NIAID, said the preliminary results were “very optimistic”, adding that the drug had shown “clear-cut positive effect in diminishing time to recover”. The drug isn’t a vaccine, but is a treatment for patients with the virus. Separately, Gilead released the results from its own set of trials, which showed patients receiving a shorter 5-day treatment of the drug produced similar results to those patients taking it for 10-days. A shorter course of the drug would allow more patients to be treated with current stocks of the drug. </span></p>
<p><span><strong>The New York Times reported that emergency regulatory approval for the drug was planned soon.</strong> The remdesivir news, announced by Gilead before the US market open, has boosted risk appetite and equity markets and given hope that economies can be reopened more quickly and safely.</span></p>
<p><span><strong>It’s a Euro-focused day</strong>, with the highlight being the ECB policy announcement at 12:45BST and press conference starting at 13:30BST. During the morning, Eurozone GDP and CPI inflation figures, as well as German unemployment claims, will be released. After that, US weekly jobless claims, along with March personal spending and the PCE deflator, are also due. </span></p>
<p><span><strong>Following the French numbers, there are downside risks to Eurozone Q1 GDP forecasts.</strong> The economic shutdown is also expected to lead to a sharp rise in German jobless claims to around 40k, but the risk is that it may be higher. In the US, market watchers forecast a rise of 3 million for initial jobless claims. </span></p>
<p><span><strong>The main event is the ECB policy decision.</strong> Interest rates are expected to be left unchanged, while the ECB has already committed to buying €1.1 trillion of bonds this year, including €750bn in the new Pandemic Emergency Purchase Programme (PEPP) covering both public and private sector securities. Nearly €100bn of bonds under the PEPP has been bought in the past four weeks (see chart). The ECB has stated that it is “fully prepared to increase the size of its asset purchase programmes and adjust their composition, by as much as necessary and for as long as needed”. That points to a risk that the PEPP may be expanded today, but it’s probably more likely the ECB hold off for now while sending a strong signal of its readiness to do more in the future, especially if economic prospects worsen further. Markets will be looking for more transparency in the ECB’s purchases, especially as PEPP purchases will be conducted in a ‘flexible’ manner. That raises questions on how closely purchases are guided by the capital key and whether issue/issuer limits may be lifted. Eligibility and collateral criteria have also been relaxed. There will be close attention on President Lagarde’s communication, especially after her faux pas at the last press conference (“we are not here to close spreads”) which resulted in a widening of peripheral spreads, raising the risk of euro fragmentation.</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: 1.0750 (711M), 1.0775-85 (600M), </span><b>1.0800 (2.1BLN)</b><span>, 1.0900-05 (450M) </span><b>1.0945 (1.1BLN)</b><span>, 1.0960 (350M)</span></li>
<li><span>GBPUSD: 1.2320 (210M), 1.2395-1.2400 (500M), 1.2430 (271M)</span></li>
<li><span>USDJPY: </span><b>106.60-65 (1.1BLN)</b><span>, 106.80 (300M), </span><b>106.90-107.00 (1BLN) 107.10-15 (1BLN), 107.35 (1.4BLN), 107.50 (2.2BLN)</b><span>, 107.55 (350M) 107.60-65 (900M), </span><b>107.80-90 (2BLN), 108.00 (1.1BLN)</b></li>
<li><span>AUDUSD:</span><b> 0.6570 (2.7BLN)</b></li>
</ul>
<h3><b>Technical &amp; Trade Views</b></h3>
<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 UPDATE Heavy rotation continues around the daily VWAP a close below 1.08 will encourage bears, above 1.09 will do the same for bulls</span></p>
<p><img class="aligncenter size-full wp-image-42710" src="http://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.33.19.png" alt="" width="2149" height="1236" srcset="https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.33.19.png 2149w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.33.19-300×173.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.33.19-1024×589.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.33.19-768×442.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.33.19-1536×883.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.33.19-2048×1178.png 2048w" sizes="(max-width: 2149px) 100vw, 2149px" /></p>
<p><b>GBPUSD (Intraday bias: Bullish above 1.2350 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 UPDATE a close through 1.24 will open a move back to test bids at 1.2250</span></p>
<p><img class="aligncenter size-full wp-image-42711" src="http://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.41.17.png" alt="" width="2150" height="1238" srcset="https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.41.17.png 2150w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.41.17-300×173.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.41.17-1024×590.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.41.17-768×442.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.41.17-1536×884.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.41.17-2048×1179.png 2048w" sizes="(max-width: 2150px) 100vw, 2150px" /></p>
<p><b>USDJPY (intraday bias: Bearish below 107 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-42712" src="http://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.36.44.png" alt="" width="2151" height="1239" srcset="https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.36.44.png 2151w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.36.44-300×173.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.36.44-1024×590.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.36.44-768×442.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.36.44-1536×885.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.36.44-2048×1180.png 2048w" sizes="(max-width: 2151px) 100vw, 2151px" /></p>
<p><b>AUDUSD (Intraday bias: Bullish above .6450 targeting .6700)</b></p>
<p><span>AUDUSD From a technical and trading perspective, as .6450 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 .6450 would concern the bullish bias. </span></p>
<p><img class="aligncenter size-full wp-image-42713" src="http://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.38.07.png" alt="" width="2151" height="1237" srcset="https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.38.07.png 2151w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.38.07-300×173.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.38.07-1024×589.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.38.07-768×442.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.38.07-1536×883.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/04/Screenshot-2020-04-30-08.38.07-2048×1178.png 2048w" sizes="(max-width: 2151px) 100vw, 2151px" /></p>
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