There are not many changes in global investor sentiment today, as stock markets continue to shut down exit optimism. Much better than expected job data from the US also provides something to cheer for. In the foreign exchange markets, the latest steps seem to be exhausted. The Australian dollar is notably weaker in earnings after a long bull run. But Swiss Franc is the weakest, while the Canadian dollar is not far behind in the BoC interest rate decision. On the other hand, the New Zealand Dollar and Euro are currently the strongest today. Markets could turn into mixed consolidation trading.
Technically, Gold is back in 1711.01 less support with this week’s fall. Break is likely to extend the correction pattern from 1765.25 by another down leg, against 100% projection of 1765.25 to 1693.54 from 1745.14 at 1673.53. That could be a sign of a rebound in dollars elsewhere. Meanwhile, AUD / NZD continues to struggle to maintain above 1.0865 near resistance. Interrupting minor support of 1.0667 will indicate short-term fulfillment and bring back a deeper pull. If both happen as mentioned, they could together point to a deeper pull back into the powerful AUD / USD.
In Europe, the FTSE is currently up 1.16%. DAX has increased by 2.37%. CAC has risen 2.01%. German 10-year yield increased 0.02277 at -0.384. Earlier in Asia, Nikkei rose 1.29%. Hong Kong HSI rose 1.37%. China Shanghai SSE rose 0.07%. The Singapore Strait Times rose 3.40%. Japan’s 10-year JGB yield increased 0.0022 to 0.013.
US ADP employment fell -2760k, job losses likely topped
The U.S. ADP report showed only -2760,000 declines in private sector jobs in May, well below previous months -19557k. By enterprise size, small businesses lost -435k jobs, medium-sized businesses lost -722k, large companies lost -1604k. By sector, goods-producing companies lost -794k, service-provider companies lost -1967k.
“The impact of the COVID-19 crisis continues to weigh on businesses of all sizes,” said Ahu Yildirmaz, co-head of the ADP Research Institute. “While the labor market is still slanting from the effects of the pandemic, the workplace is likely to lose weight in April, as many states have begun a gradual reopening of businesses.”
The unemployment rate in the euro area rose to 7.3% in April, 11.9 million people are unemployed
The unemployment rate in the euro area rose to 7.3% in April, up from 7.1% in March. EU unemployment rose to 6.6%, up from 6.4%. Eurostat estimates that 14.079 million men and women in the EU, of whom 11.919 million in the euro area, were unemployed in April 2020. Compared to March 2020, the number of unemployed increased by 397000 in the EU and by 211000 in the euro area.
The euro area PPI came in at -2.0% mom, -4.5% yoy in April, expecting -1.8% mom, -4% yoy. Germany’s unemployment rate rose 238k in May, above expectations to 200k. Unemployment rose to 6.3%, up from 5.8%, above expectations of 6.2%.
Eurozone PMI composition completed 31.9, still pointing to -9% GDP decline in 2020
Eurozone PMI Services ended at 30.5 in May, up from April 12.0. The PMI Composite was completed at 31.9, up from 13.6. Among the Member States where data are available, improvements were seen in Italy, Germany, France and Spain. But all PMI composition remained well below 50, with Italy at 33.9, Germany at 32.3, France at 32.1, Spain at 29.2.
Chris Williamson, Chief Business Economist at IHS Markit said:
Eurozone GDP is constantly set to fall at an unprecedented rate in the second quarter, accompanied by the largest rise in unemployment seen in the history of the euro area. “But” the decline has already been eased significantly in all the countries surveyed. “
“Provided there is no resumption of infection numbers, the planned lifting of lockdowns will inevitably help to increase business activity and mood further in the coming months. However, the outlook is tempered by the prospect that demand will remain weak due to household spending, which hit high unemployment levels and corporate spending is subdued when companies repair balance sheets.
“We are therefore cautious about improvement. Our forecasters expect GDP to fall by almost 9% by 2020 and that it will take several years for a recovery to pre-pandemic production levels to take.
UK PMI services ended at 1 p.m. 29.0, and large cuts in corporate consumption were a major driver
UK PMI Services was completed at. 29.0 in May, up from April 13.4. PMI Composite was completed at 1 p.m. 30.0, up from April’s record low of 13.8. Markit said new works fell amid cuts in business and consumer spending. Employment remains in a sharp downward trajectory. However, business expectations rise again from record lows in March.
Tim Moore, CFO at IHS Markit: “The COVID-19 pandemic continued to have a serious impact on UK service sector activity in May, despite a lift in some areas from gradual easing of closure measures. Survey respondents noted that deep cuts in corporate consumption had been a major factor slowing down business activity in May, leading to a lack of work to replace completed projects.
Swiss GDP increased by -2.6% in the first quarter, which was worse than expected
Swiss GDP contracted -2.6% qoq in Q1, worse than expected at -2.2% qoq. “Due to the coronavirus pandemic and measures to contain it, economic activity in March was very limited. The international economic downturn also slowed exports. “
By production method, production decreased -1.3% qoq. Construction fell -4.2% qoq. Trade fell -4.4%. Accommodation and food fell -23.4% qoq. Business services fell -1.9% qoq. Health and social activities fell -3.9% qoq. Arts, entertainment and recreation fell -5.4% qoq. On the other hand, financing and insurance rose 1.5% qoq. Public administration increased 0.8% quoq.
By spending method, private consumption fell -3.5% qoq. Equipment and software investment fell -4.0% qoq. Construction investment fell -0.4% qoq. Exports of services fell -4.4% qoq. Imports of goods fell -1.1% qoq while imports of services fell -1.2% qoq. On the other hand, public consumption increased 0.7% qoq. Exports of goods increased 3.4% qoq.
Australia’s GDP rose -0.3% in Q1 and started the first recession in 29 years
Australia’s GDP rose -0.3% qoq in Q1, meeting expectations. It is the first contraction in 9 years. In addition, the recession should have begun in the first quarter for the first time in 29 years. Annual growth slowed to 1.4% yoy, the lowest since September 2009, when Australia was in the midst of the global financial crisis.
Treasurer Josh Frydenberg confirmed that the economy is in a recession, and “it’s based on the advice I have from the Treasury on where the June quarter is expected to be.” “Based on what we know from Treasury, we will see a contraction in the June quarter, which will be much more extensive than what we have seen in the March quarter,” he added.
However, Frydenberg said that “in light of a world 100 pandemic, the Australian economy has been remarkably resilient.” “This strength gave us the fiscal firepower to respond as we have done; About $ 260 billion in financial aid, or more than 13 percent of GDP. “
Also from Australia, the AiG Performance of Construction Index rose to 24.9 in May, up from 21.6. Building permits fell -1.8% mom in April, better than expected by -15.0% mom.
Japan’s PMI composition rose to 27.8 in May, suggesting a -10% annual GDP decline
Japanese PMI Services improved to 26.5 in May, up from April’s record low of 21.5. The PMI Composite also rose slightly to 27.8, up from April’s record low of 25.8. The data recorded a “historically unparalleled” decline in production.
Joe Hayes, an economist at IHS Markit, said: “While the Japanese government has seen a reduction in the severity of its shutdown in May, recent survey data indicated that economic activity continued to decline at an unprecedented rate before the coronavirus crisis began… Looking at the May survey data in isolation, the reading of the composite PMI shows an indication that GDP is falling by approx. 10% on an annual basis. Given the reading in April, which was even worse, it is clear that the impact on GDP in Q2 will be huge. “
China Caixin PMI composite rose to 54.5, even more time was needed to return to normal
China Caixin PMI Services rose to 55.0 in May, up from April 44.4. The PMI Composite rose to 54.5, up from 47.6, remaining in the expansion range. Markit said business operations and new work increased rapidly in late 2010. Pandemic continued to weigh heavily on export orders. Employment fell slightly as companies look to increase efficiency.
Wang Zhe, senior economist at Caixin Insight Group, said, “In general, the improvement in supply and demand was still unable to fully offset the fallout from the pandemic, and more time is needed for the economy to return to normal. The composite employment meter remained in negative territory as companies were wary of increasing the number of employees. But they were relatively optimistic about the momentum of the economy and look forward to implementing the policies announced during the annual session of China’s top legislature. “
USD / CHF Mid-Term Outlook
Daily pivots: (S1) 0.9586; (P) 0.9612; (R1) 0.9650; More …
The USD / CHF recovery form 0.9573 continues in the early US session, but the upside is well below 0.9736 resistance. Intraday bias remains neutral, and yet another fall remains in favor. Breakage of 0.9573 extends the corrective pattern from 0.9901 to 0.9502 support. But the downside must be contained with the 61.8% retracement from 0.9181 to 0.9901 at 0.9456 to rebound. On the upside, breaches of 0.9736 resistance will return the bias to the upside instead.
In the bigger picture, decline from 1.0237 is seen as the third part of the pattern from 1.0342 (low in 2016). It could have ended at 1 p.m. 0.9181 after hitting 0.9186 key support (low 2018). Break of 0.9901 will extend the rebound mold 0.9181 to 1.0023 resistance. After all, in the medium term, trading is likely to continue between 0.9181 / 1.0237 for a longer period.
Updating economic indicators
|22:30||AUD||AiG Performance of Construction Index May||24.9||21.6|
|23:01||British pound||BRC Shop Price Index Y / Y Apr||-2.40%||-1.70%|
|01:30||AUD||GDP Q / Q Q1||-0.30%||-0.30%||0.50%|
|01:30||AUD||Building permits M / M Apr||-1.80%||-15.00%||-4.00%||-2.50%|
|01:45||CNY||Caixin Services PMI May||55||47.4||44.4|
|05:45||CHF||GDP Q / Q Q1||-2.60%||-2.20%||0.30%|
|07:45||EUR||Italy Services PMI May||28.9||27||10.8|
|07:50||EUR||France Services PMI May F||31.1||29.4||29.4|
|07:55||EUR||Germany Services PMI May F||32.6||31.4||31.4|
|07:55||EUR||Germany Unemployment rate May||6.30%||6.20%||5.80%|
|07:55||EUR||Germany Unemployment change May||238K||200K||373K||372K|
|08:00||EUR||Italy Unemployment Apr||6.30%||9.20%||8.40%||8.00%|
|08:00||EUR||Eurozone Services PMI May F||30.5||28.7||28.7|
|half past eight||British pound||Services PMI May||29||27.9||27.8|
|09:00||EUR||Eurozone unemployment rate apr||7.30%||8.20%||7.40%||7.10%|
|09:00||EUR||Eurozone PPI M / M Apr||-2.00%||-1.70%||-1.50%|
|09:00||EUR||Eurozone PPI Y / Y Apr||-4.50%||-4.00%||-2.80%|
|00:15||USD||ADP Employment Change May||-2760K||-9500K||-20236K||-19557K|
|half past one||CAD||Labor Productivity Q / Q Q1||3.40%||-0.10%|
|13:45||USD||Services PMI May F||36.9||36.9|
|14:00||USD||ISM Non-manufacturing PMI Apr||43||41.8|
|14:00||USD||ISM Non-Manufacturing Employment Apr||35.8||30|
|14:00||USD||Factory Orders M / M Apr||-12.40%||-10.40%|
|14:30||USD||crude Oil Inventories||3.0M||7.9|