Daily Market Outlook, May 13, 2020

<h2><span>Daily Market Outlook, May 13, 2020 </span></h2>
<p><strong>The Asian equity market was mixed after US markets closed lower on concerns about the potential for a second wave of infections if the economy is reopened too soon. </strong></p>
<p><span><strong>The Reserve Bank of New Zealand left interest rates on hold at 0.25%</strong>, but increased its Large Scale Asset Purchase programme and indicated that negative rates “will become an option in the future”. </span></p>
<p><span><strong>In the UK, Chancellor Sunak extended the government’s staff furlough programme to the end of October</strong>, with employers starting to bear some of the cost of the scheme. The British Retail Consortium reported a sharp year-on-year fall in total sales of 19.1% in April. The Office for National Statistics released its first estimate of UK GDP for March and Q1 as a whole earlier this morning. As anticipated, output fell sharply during March when lockdown measures were introduced, although not as severely as forecast. The ONS said activity in the economy plunged by 5.8%m/m in March. That resulted in a Q1 contraction of -2.0%q/q, compared with our central forecast of -3.2% and the consensus forecast of -2.6%. As lockdown measures were introduced only in late March, their impact will show up much more visibly in Q2. Last week, the Bank of England said it expects Q2 GDP to fall on a quarter-on quarter basis by 25%.</span></p>
<p><span><strong>The key focus later today will be on US Fed Chairman Jay Powell’s</strong> scheduled discussion on current economic issues at 2pm (UK time). In light of the unprecedented fall of 20.5 million jobs in just the single month of April, his comments on the policy outlook will be closely analysed. There has been some debate recently on whether US interest rates could be cut below zero. A number of Fed officials, however, have pushed back against the idea, although President Trump said the US should accept the “gift” of negative rates. </span></p>
<p><span><strong>US producer price inflation figures for April will provide further evidence of falling price pressures</strong> on the back of lower oil prices and weakening demand in the economy outweighing supply restrictions. Expect headline PPI to fall from 0.7%y/y to -0.1%y/y (consensus: -0.4%y/y) and core PPI excluding food and energy from 1.4%y/y to 0.8%y/y (consensus: 0.9%y/y). </span></p>
<p><span><strong>In the Eurozone, March industrial production to crater by 11.2% on the month</strong> (consensus: -12.5%) following particularly large declines in Italy (-28.4%) and France (-16.4%). ECB Chief Economist Philip Lane will speak at two events today at 12pm and 5pm. Lane yesterday defended the ECB’s QE programme after the German Constitutional Court last week questioned whether its asset purchases were proportionate.</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 (406M), 1.0800 (300M), 1.0890-1.9000 (800M) massive EURUSD strikes between 1.0750-1.0900 all week</span></li>
<li><span>GBPUSD: 1.2415-20 (360M), 1.2440 (350M)</span></li>
<li><span>USDJPY: 106.35 (310M), 106.50 (260M), 107.00 (1BLN), 107.40 (1.1BLN)</span></li>
</ul>
<h3><span>Technical &amp; Trade Views</span></h3>
<p><b>EURUSD Bias: Bullish above 1.08 targeting 1.1050</b></p>
<p><span> From a technical and trading perspective, 1.09 remains pivotal for the achievement of the interim (1.1050) and primary (1.1240) upside objectives. Last week’s defense of the ascending trendline support has renewed bullish spirits. As last week’s lows remain intact on a closing basis then bulls will seek to test offers and stops to 1.10 as the initial upside objective this week. UPDATE massive EURUSD strikes between 1.0750-1.0900 all week</span></p>
<p><img class="aligncenter size-full wp-image-43379" src="http://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.14.46.png" alt="" width="2206" height="1238" srcset="https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.14.46.png 2206w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.14.46-300×168.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.14.46-1024×575.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.14.46-768×431.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.14.46-1536×862.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.14.46-2048×1149.png 2048w" sizes="(max-width: 2206px) 100vw, 2206px" /></p>
<p><b>GBPUSD Bias: Bullish above 1.2350 targeting 1.28)</b></p>
<p><span>GBPUSD From a technical and trading perspective, bids emerged last week at the range support as the trendline Fridays close flipped the daily chart bullish as per the near term volume weighted average price. As 1.2390 supports look for a close above 1.25 to encourage the bullish bias to retest range resistance towards 1.26. UPDATE a close below 1.2270 will be a bearish development targeting a move back towards 1.20. Note the breach of the momentum trendline support</span></p>
<p><img class="aligncenter size-full wp-image-43380" src="http://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.15.59.png" alt="" width="2206" height="1241" srcset="https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.15.59.png 2206w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.15.59-300×169.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.15.59-1024×576.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.15.59-768×432.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.15.59-1536×864.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.15.59-2048×1152.png 2048w" sizes="(max-width: 2206px) 100vw, 2206px" /></p>
<p><b>USDJPY 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 downside objectives opening a retest of range resistance above 109 before lower again</span></p>
<p><img class="aligncenter size-full wp-image-43381" src="http://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.16.50.png" alt="" width="2204" height="1238" srcset="https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.16.50.png 2204w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.16.50-300×169.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.16.50-1024×575.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.16.50-768×431.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.16.50-1536×863.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.16.50-2048×1150.png 2048w" sizes="(max-width: 2204px) 100vw, 2204px" /></p>
<p><b>AUDUSD Bias: Bullish above .6450 targeting .6700)</b></p>
<p><span>AUDUSD From a technical and trading perspective, price testing pivotal .6568 prior cycle highs area if sufficient supply is seen here look for another leg lower to test trend support back to .6330 before another attempt to base and make another run towards the .6700 primary upside objective</span></p>
<p><img class="aligncenter size-full wp-image-43382" src="http://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.17.48.png" alt="" width="2206" height="1235" srcset="https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.17.48.png 2206w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.17.48-300×168.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.17.48-1024×573.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.17.48-768×430.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.17.48-1536×860.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/05/Screenshot-2020-05-13-08.17.48-2048×1147.png 2048w" sizes="(max-width: 2206px) 100vw, 2206px" /></p>
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