Daily Market Outlook, May 01, 2020
<h2>Daily Market Outlook, May 01, 2020</h2>
<p><span><strong>A risk-off feel has pervaded the market for the start of May</strong> and over the last day of trading for the month of April, with global equities weaker and global rates lower. Commodity currencies have underperformed. </span></p>
<p><span><strong>There has been plenty of news to digest and the market has taken on a slightly more cautious tone to wrap up a very good month for risk assets</strong>. The S&P500 is currently down, but posted a monthly gain of over 12%, the best result since January 1987. </span></p>
<p><span><strong>Most Asian markets were closed for a public holiday, but equity markets in Japan and Australia were lower after guidance from the tech sector (e.g. Amazon)</strong> on the impact of the coronavirus on costs offsetting stronger sales. Investors also took on board US-China tensions on culpability for the virus. South Korean April trade data confirmed weakness in global trade. </span></p>
<p><span><strong>In the UK, PM Johnson said yesterday that the country is past the peak of the pandemic and will next week set out a ‘comprehensive plan’ for reopening,</strong> but he warned against risks of a second spike. The number of US cases rose at the slowest pace for about a month.</span></p>
<p><span><strong>On the policy front, the ECB made no change to its bond buying programme (worth over €1000b through to the end of the year)</strong> but ECB President Lagarde said that the Bank was fully prepared to increase the size of the programme and to adjust its composition by as much as necessary and for as long as needed. The Bank cut the cost of funding for banks in the TLTRO – enabling them to borrow from the ECB at a rate as low as minus 1% for lending to businesses and households. GDP for the euro-area area showed a record slump of 3.8% q/q in Q1, in line with expectations, and Lagarde warned that growth could fall to as low as 12% for the full year. She also probed European governments for “an ambitious and coordinated” fiscal response, something that has been lacking so far through the current crisis. The weak GDP data across the euro area and the ECB announcement helped support a rally in European bonds, seeing Germany’s 10-year rate down 9bps to minus 0.59%. EUR initially fell after the ECB was out of the way, before moving higher on month end rebalancing flows.</span></p>
<p><span><strong>For the US, initial jobless claims last week rose by 3.8m</strong>, showing further evidence of moderating over recent weeks, but still taking the running six-week total past 30m, an epic increase that highlights the severity of the sudden stop in the economy. </span></p>
<p><span><strong>The Fed expanded the scope and eligibility for the Main Street Lending Programme</strong>, now including larger companies with up to 15,000 employees or up to $5b in revenue (more than 40% of the S&P500), while the minimum loan size was halved to $500k. The programme can support lending of up to $600b. Alongside European bonds, US Treasuries have been well supported, seeing the 10-year rate fall back below 0.60% to a low of 0.58%</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: 1.0900 (630M)</span></li>
<li><span>GBPUSD: 1.2400 (636M)</span></li>
<li><span>USDJPY: 107.40 (215M)</span></li>
</ul>
<h3><b>Technical & Trade Views</b></h3>
<p><b>EURUSD (Intraday bias: 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 as 1.09 now acts as support bulls target a test of offers and stops above 1.10</span></p>
<p><img class="aligncenter size-full wp-image-42760" src="http://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.32.24.png" alt="" width="2143" height="1236" srcset="https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.32.24.png 2143w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.32.24-300×173.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.32.24-1024×591.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.32.24-768×443.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.32.24-1536×886.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.32.24-2048×1181.png 2048w" sizes="(max-width: 2143px) 100vw, 2143px" /></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 as 1.25 acts a support bulls will look for a test of offers and stops at 1.27</span></p>
<p><img class="aligncenter size-full wp-image-42761" src="http://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.33.58.png" alt="" width="2144" height="1238" srcset="https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.33.58.png 2144w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.33.58-300×173.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.33.58-1024×591.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.33.58-768×443.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.33.58-1536×887.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.33.58-2048×1183.png 2048w" sizes="(max-width: 2144px) 100vw, 2144px" /></p>
<p><b>USDJPY (intraday bias: Bearish below 107.50 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-42762" src="http://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.36.36.png" alt="" width="2148" height="1240" srcset="https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.36.36.png 2148w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.36.36-300×173.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.36.36-1024×591.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.36.36-768×443.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.36.36-1536×887.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.36.36-2048×1182.png 2048w" sizes="(max-width: 2148px) 100vw, 2148px" /></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. UPDATE the current pullback could extend to symmetry swing support sighted at .6376 before buyers reengage to challenge the .6700 primary objective. </span><b>Note significant seasonal trends for USD strength in May as discussed in yesterday’s live analysis session.</b></p>
<p><img class="aligncenter size-full wp-image-42763" src="http://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.39.46.png" alt="" width="2141" height="1238" srcset="https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.39.46.png 2141w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.39.46-300×173.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.39.46-1024×592.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.39.46-768×444.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.39.46-1536×888.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-01-07.39.46-2048×1184.png 2048w" sizes="(max-width: 2141px) 100vw, 2141px" /></p>
<p> </p>
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