Daily Market Outlook, May 04, 2020
<h2><span>Daily Market Outlook, May 04, 2020 </span></h2>
<p><span><strong>Risk-off tone has hit the market at the start of the month and has continued overnight with most Asian equity markets in the red</strong>. Generally, however, liquidity remains thin with markets in Japan and China closed for Golden Week and Labour Day holidays respectively. Sentiment overall remains weak following reports that the US is considering steps against China over the Covid-19 outbreak, which could include new tariffs being imposed.</span></p>
<p><span><strong>Growing signs that the pace of the Covid-19 pandemic’s spread has peaked is leading to a growing number of countries either easing lockdown restrictions or announcing intentions</strong> to do so in the near future. In Europe, Italy and Spain are further lowering their curbs from today, and will be followed by France next week. In the US, a state-by-state approach is being taken with some already announcing a loosening up. Some Asian countries have also outlined plans. In the UK, however, current lockdown conditions remain in place, though PM Johnson has promised that a “roadmap” out of the current social distancing measures will be released this week. An update is required by 7th May at the latest as then the current lockdown order expires. Meanwhile, amid news from both the UK and the US on progress in developing a covid-19 vaccine, EU Commission President Van der Leyen will host a conference call of global leaders today to discuss the financing of further research. </span></p>
<p><span><strong>Today’s economic data releases are expected to highlight the economic malaise stemming from the lockdown measures</strong> that were in place during the month of April. Final readings for April Eurozone manufacturing PMIs are expected to be unchanged from their initial estimates which showed big drops in activity during the month. There will also be April data for countries such as Italy and Spain who don’t publish ‘flash’ readings. Meanwhile, in the US, March factory orders are expected to show a sharp decline in new business, reflecting the impact of lower durable goods orders. </span></p>
<p><span><strong>Overnight, the Reserve Bank of Australia is expected to keep interest rates at a record low of 0.25%.</strong> It is likely to reflect on an updated assessment of the economic outlook, which depends on containment of the C-19 virus and therefore remains highly uncertain.</span></p>
<p><span><strong>The broad USD diverged on Friday,</strong> as cyclicals underperformed on profit taking. The AUD and NZD was weighed down further by poor data, while the CAD was also on the back foot after new BOC governor Macklem said explicitly that a negative interest rate is part of the toolkit. However, the EUR and JPY gained against the USD amid some choppy trading at the end of the week.</span></p>
<p><span><strong>Based on CFTC data, the investment community remains undecided on broad USD prospects.</strong> Non-commercial accounts reduced their net implied USD shorts, but leveraged accounts reduced their net implied USD longs. Asset managers also cut their net implied USD shorts. </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>1.0865-70 (1BLN)</b><span>, 1.0900 (340M), </span><b>1.0955 (1BLN)</b><span>, 1.1010-15 (400M)</span></li>
<li><span>EURGBP: 0.8775 (454M)</span></li>
<li><span>AUDUSD: 0.6530 (1.9BLN)</span></li>
</ul>
<h3><span>Technical & Trade Views</span></h3>
<p><b>EURUSD (Intraday bias: Bullish above 1.09 targeting 1.1050 then 1.1240 )</b></p>
<p><span>EURUSD From a technical and trading perspective, 1.09 remains pivotal for the achievement of the interim (1.1050) and primary (1.1240) upside objectives. As prices test the interim objective we could see profit taking pullback to retest support back to 1.09/1.0850 but as this area attracts bids we can see a base develop for another run towards 1.1240. A daily closing breach of 1.0850 would be detrimental to the bullis thesis opening 1.0730 again</span></p>
<p><img class="aligncenter size-full wp-image-42829" src="http://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.29.49.png" alt="" width="2156" height="1239" srcset="https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.29.49.png 2156w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.29.49-300×172.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.29.49-1024×588.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.29.49-768×441.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.29.49-1536×883.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.29.49-2048×1177.png 2048w" sizes="(max-width: 2156px) 100vw, 2156px" /></p>
<p><b>GBPUSD (Intraday bias: Bullish above 1.2350 targeting 1.28)</b></p>
<p><span>GBPUSD From a technical and trading perspective,the bullish thesis is under pressure and a close today below 1.2440 would flip the daily chart bearish and open a deeper decline to retest the range base back at 1.2160. </span></p>
<p><img class="aligncenter size-full wp-image-42830" src="http://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.35.06.png" alt="" width="2151" height="1237" srcset="https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.35.06.png 2151w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.35.06-300×173.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.35.06-1024×589.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.35.06-768×442.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.35.06-1536×883.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.35.06-2048×1178.png 2048w" sizes="(max-width: 2151px) 100vw, 2151px" /></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-42831" src="http://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.37.21.png" alt="" width="2152" height="1237" srcset="https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.37.21.png 2152w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.37.21-300×172.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.37.21-1024×589.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.37.21-768×441.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.37.21-1536×883.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.37.21-2048×1177.png 2048w" sizes="(max-width: 2152px) 100vw, 2152px" /></p>
<p><b>AUDUSD (Intraday bias: Bullish above .6400 targeting .6700)</b></p>
<p><span>AUDUSD From a technical and trading perspective, the decline back though .6450 concerns the bullish bias, a breach of .6350 would suggest a more meaningful top is in place opening a deeper decline to test support back towards .6150 before another base attempt. On the day a close back through .6500 will be needed to re-engage bullish spirits </span></p>
<p><img class="aligncenter size-full wp-image-42832" src="http://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.42.50.png" alt="" width="2152" height="1238" srcset="https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.42.50.png 2152w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.42.50-300×173.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.42.50-1024×589.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.42.50-768×442.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.42.50-1536×884.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-04-08.42.50-2048×1178.png 2048w" sizes="(max-width: 2152px) 100vw, 2152px" /></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>
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