Bloomberg reports that Jamie Dimon sees “pretty good odds” of a fast economic rebound starting in the third quarter thanks to the U.S. government’s stimulus programs and the strength of the consumer going into the pandemic.
“You could see a fairly rapid recovery,” the JPMorgan Chase & Co. chief executive officer said Tuesday at a virtual conference hosted by Deutsche Bank AG. “The government has been pretty responsive, large companies have the wherewithal, hopefully we’re keeping the small ones alive.”
Dimon, who runs the largest U.S. bank, pointed to economists’ forecasts that show unemployment spiking to around 18% this quarter, then falling to 14% in the third quarter and declining to about 10% or 11% by the end of the year.
In response to the crisis, the Federal Reserve has effectively cut interest rates to zero, pumped trillions of dollars into the economy and announced plans for nine emergency lending programs, including support for small businesses. The jobless rate more than tripled in April to 14.7% as employers cut an unprecedented 20.5 million jobs.
Dimon said he thinks the Fed did the right thing in acting quickly and with what he referred to as “increasingly strong actions.”
“This wasn’t the bazooka,” he said. “The Fed took out the whole military and applied it. Just announcing these programs reduced spreads in the market. It’s going to save a lot of small businesses” and it’s “helping people avoid stress.”
Many states have begun the process of easing restrictions on businesses put in place to slow the spread of Covid-19, and “you’re already seeing the positive effects of the opening-up taking place, at least for the economy,” Dimon said.
FXStreet reports that FX Strategists at UOB Group expect USD/CNH to edge higher in the near term.
24-hour view: “USD traded between 7.1355 and 7.1491 yesterday, narrower than our expected sideway-trading range of 7.1280/7.1500. The firm price action upon opening this morning has resulted in an up-tick in momentum. While the bias is tilted to the upside, any advance is expected to face strong resistance at last week’s 7.1645 top. That said, a clear break of the solid resistance could potentially lead to a rush higher. Support is at 7.1430 followed by 7.1350.”
Next 1-3 weeks: “While USD closed little changed yesterday (7.1491, +0.02%), upward momentum is showing sign of picking up. In other words, the ‘mildly positive’ outlook that we indicated last Friday (22 May, spot at 7.1290) has improved further and from here, the risk of a break of the key resistance at 7.1652 has increased. A breach of this level would signify a break-out and could potentially lead a sharp and rapid rise as the next resistance level of note is not until 7.2000. To look at it another way, the odds for a strong advance in USD has increased and only a break of 7.1100 (no change in ‘strong support’ level for now) would indicate that a break-out is unlikely.”
CNBC reports that the International Energy Agency believes the coronavirus pandemic has paved the way for the largest decline of global energy investment in history, with spending set to plummet in every major sector this year.
In the group’s annual World Energy Investment report, published on Wednesday, the IEA said that the unparalleled decline in worldwide energy investment had been “staggering in both its scale and swiftness.”
It warned the economic impact of the public health crisis could have “serious” implications for energy security and clean energy transitions.
“The historic plunge in global energy investment is deeply troubling for many reasons,” Fatih Birol, executive director at the IEA, said in a statement.
“It means lost jobs and economic opportunities today, as well as lost energy supply that we might well need tomorrow once the economy recovers,” he continued. “The slowdown in spending on key clean energy technologies also risks undermining the much-needed transition to more resilient and sustainable energy systems.”
At the start of 2020, the IEA said global energy investment was on pace for growth of around 2%, reflecting the largest annual rise in spending in six years.
But, after the Covid-19 crisis brought large swathes of the world economy to a halt in a matter of months, the IEA said it now expects global investment to tumble by 20% compared to last year.
To be sure, that’s a fall of nearly $400 billion year-on-year.
It is very hard to forecast how badly the economy has been affected
Economic contraction now seen somewhere between 'medium' and 'severe' scenario
ECB had to resort to exceptional measures to make sure there is plenty of liquidity
ECB primary objective is to ensure price stability
FXStreet reports that in its latest client report, Morgan Stanley raised its year-end Brent oil-price forecast, in anticipation of faster rebalancing in the oil market.
“We expect demand to rebound to about 97 million barrels per day (bpd) by Q4 as economies come out of lockdown - a significant improvement although still down about 4 million bpd year-on-year.”
“Now that the rebalancing has been set in motion, we expect it to continue. Our base case forecasts call for a further tightening of the oil market over the next few quarters.”
“The recent rebalancing was mostly supply rather than demand-driven with the rise in crude prices compressing refining margins even further and inventories of oil products rising fast relative to crude oil stocks.”
eFXdata reports that TD Research maintains a structural bullish USD bias through Q3.
"Our forecasts have called for a weaker USD into Q4, with EUR finally marking a break to the topside. That reflects the risks around the US elections, prospects that the world could start to see green shoots for global growth on the horizon, and the fact that the USD might begin to care about US-style MMT. Any progress on this broad European proposal would cement that view while the proposal does reduce the tail risks of an EZ breakup," TD notes.
"However, we don't think these themes will resonate with the market just yet, and we believe the USD makes another leg higher, especially against European currencies like EUR and GBP this quarter. The other wildcard rests on US/China trade relations, which seem to have gotten worse. While the tone will likely continue to get worse into the election, we don't expect them to scrap the trade deal or that the US imposes sanctions," TD adds.
|01:30||Australia||Construction Work Done||Quarter I||-0.3%||-1.5%||-1.0%|
The US dollar rose against the euro, pound, and Australian dollar and was little changed against the Japanese yen. The Chinese yuan is getting cheaper due to the further deterioration of relations between the US and China. Washington may take further measures against China over Hong Kong by the end of this week, US President Donald Trump has said.
"Something you will hear before the end of this week, I think it will be powerful," he said, responding to a journalist's question about possible sanctions against China. However, he did not specify that it is about sanctions.
Last week, the Chinese authorities announced their intention to pass a bill creating a law enforcement mechanism to ensure national security in Hong Kong.
Premier Li Keqiang confirmed that Beijing intends to create "stable legal systems and enforcement mechanisms to protect national security in Hong Kong."
The yuan was also pressured by reports that the US is considering imposing sanctions on Chinese officials.
The ICE Dollar index, which shows the value of the us dollar against six major world currencies, rose by 0.30% compared to the previous trading day.
Reuters reports that German companies expect their total number of employees will continue to shrink, though the outlook for hiring has improved slightly in May after collapsing the previous month as a result of the coronavirus crisis, according to an Ifo institute survey.
The institute's employment barometer rose slightly to 88.3 points, up from 86.3 in April, helped by improving sentiment in the services and trade sectors. The manufacturing sector continued to report shrinking employment numbers.
Bright spots were in the fields of business and tax consultancy and auditing, where companies were seeking to hire new staff, as well as food and bicycle retail.
FXStreet reports that a break above 0.6230 in NZD/USD should open the door to further upside, in opinion of FX Strategists at UOB Group.
24-hour view: “We highlighted yesterday the ‘uptick in momentum could lead to NZD moving towards 0.6135’. The subsequent strong surge in NZD that sent it to a high of 0.6228 came as a surprise. The rapid rally is appears to be severely over-extended and further sustained NZD strength is unlikely for today. NZD is more likely to consolidate its gains and trade sideways at these higher levels. Expected range for today, 0.6155/0.6225.”
Next 1-3 weeks: “While we have expected a stronger NZD since early last week, we were of the view that ‘the solid resistance at 0.6175 may be tough to break’. However, NZD blast past 0.6175 yesterday (26 May) with nary a glance and rocketed to a high of 0.6228. At this stage, there is no sign of a top but 0.6230 is another solid resistance and NZD has to move clearly above this level before further sustained advance can be expected (next resistance is at 0.6300). The odds for such a move appear to be slightly better than even as long as NZD continues to hold above the ‘strong support’ (level had moved higher to 0.6110 from 0.6035).”
Reuters reports that French gross domestic product could fall by as much as 20% in the second quarter from the previous three months as the economy emerges from a nationwide coronavirus lockdown, the INSEE official statistics agency estimated on Wednesday.
That would mark a sharp deterioration in France's recession after the euro zone's second-biggest economy contracted 5.8% in the first quarter.
INSEE said the economy could contract 8% for the whole of 2020 in the unlikely scenario that activity returned to pre-crisis levels by July.
INSEE estimated that France's economic activity was running at 21% below normal levels after the lockdown in place from mid-March was lifted on May 11. Activity was down 33% in early May.
RTTNews reports that China's industrial profits declined at a much slower pace in April suggesting that the economic activity gradually started to recover following the coronavirus pandemic, data from the National Bureau of Statistics revealed Wednesday.
Industrial profits dropped 4.3 percent on a yearly basis, following a sharp 34.9 percent decrease in March.
During January to April period, industrial profits decreased 27.4 percent from the same period last year compared to 36.7 percent fall in the first three months of 2020.
Profits of state-owned enterprises plunged 46 percent and that of private companies fell 17.2 percent during January to April.
Data showed that automobiles, electrical machinery and electronics reported a notable recovery in April.
Production and sales increased in April, NBS official Zhu Hong said. The significant improvement in April profits was also partly due to the substantial increase in investment returns and the low base during the same period.
CNBC reports that U.S. coronavirus deaths are approaching 100,000, more than double that of any other country, according to data compiled by Johns Hopkins University. Across the country, more states reopened bars and lifted retail restrictions as California Governor Gavin Newsom announced that hair salons and barber shops could reopen in most counties under new guidelines.
Merck, meanwhile, has entered the vaccine race, announcing Tuesday it has teamed up with research nonprofit IAVI to develop a potential candidate.
Global cases: More than 5.58 million
Global deaths: At least 350,423
Resistance levels (open interest**, contracts)
Price at time of writing this review: $1.0957
Support levels (open interest**, contracts):
- Overall open interest on the CALL options and PUT options with the expiration date June, 5 is 93008 contracts (according to data from May, 26) with the maximum number of contracts with strike price $1,0700 (5288);
Resistance levels (open interest**, contracts)
Price at time of writing this review: $1.2316
Support levels (open interest**, contracts):
- Overall open interest on the CALL options with the expiration date June, 5 is 23807 contracts, with the maximum number of contracts with strike price $1,3500 (3420);
- Overall open interest on the PUT options with the expiration date June, 5 is 29652 contracts, with the maximum number of contracts with strike price $1,3500 (3095);
- The ratio of PUT/CALL was 1.25 versus 1.25 from the previous trading day according to data from May, 26
* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.
** - Open interest takes into account the total number of option contracts that are open at the moment.
|Raw materials||Closed||Change, %|
|Index||Change, points||Closed||Change, %|
|01:30||Australia||Construction Work Done||Quarter I||-3%||-1.5%|
|07:30||Eurozone||ECB President Lagarde Speaks|
|08:00||Switzerland||Credit Suisse ZEW Survey (Expectations)||May||12.7|
|14:00||U.S.||Richmond Fed Manufacturing Index||May||-53|
|16:30||U.S.||FOMC Member James Bullard Speaks|
|18:00||U.S.||Fed's Beige Book|
CURRENCY MARKET DEFINITION
The concept of currency market has several definitions:
Simply put, currency market is the market where currency transactions are made, that is, the currency of one country is exchanged for the currency of another country at a certain exchange rate. The exchange rate is the relative price of currencies of two countries or the currency of one country expressed in another country's monetary units.
Currency market is part of the global financial market, where many operations related to the global movement of capital take place.
TYPES OF MARKETS. RUSSIAN AND INTERNATIONAL CURRENCY MARKETS
There are international and domestic currency markets.
Domestic currency market — is a market within a single country.
The international currency market — is a global market that covers currency markets of all countries in the world. It does not have a specific site where trading is carried out. All operations within it are carried out through a system of cable and satellite channels that link the world's regional currency markets. Regional markets today include the Asian (with centers in Tokyo, Hong Kong, Singapore, and Melbourne), the European (London, Frankfurt am Main, and Zurich), and the American (New York, Chicago, and Los Angeles) markets.
Currency trading on the international currency market is carried out on the basis of market exchange rates, which are set on the basis of supply and demand in the market and under the influence of various macroeconomic data. Forex is the international currency market.
Currency markets can also be divided into exchange and over-the-counter markets. Exchange currency market is an organized market where trading is carried out through an exchange—a special company that sets trading rules and provides all the conditions for organizing trading under these rules.
Over-the-counter currency market — is a market where there are no certain trading rules, and purchase and sale operations are not linked to a specific place of trade, as opposed to the case of an exchange.
As a rule, an over-the-counter currency market is organized by special companies that provide services for the purchase and sale of currencies, which may or may not be members of the currency exchange. Trading operations in this market are now carried out mainly via the Internet.
The over-the-counter currency market is much larger than the exchange market in terms of trading volume. The Forex international over-the-counter currency market is considered the most liquid in the world. It operates around the clock in all financial centers of the world (from New York to Tokyo).
CURRENCY MARKET FUNCTIONS
Currency market— is the most important platform for ensuring the normal course of all global economic processes.
The main macroeconomic functions of the currency market are:
Various currencies are the main trading tool in the currency market. Exchange rates are formed under the influence of supply and demand in the market.
In addition to that, currency rates are influenced by many fundamental factors related to the global economic situation, events in national economies, and political decisions.
News about these factors can be found in various sources:
The more stable an economy is developing, the more stable its currency is. Accordingly, it is possible to predict how the currency will behave in the near future, based on statistical data published in official sources of countries with a certain regularity.
This data includes:
Interest rate level, set by national authorities regulating credit policy, is an equally important indicator. In the European Union, this is ECB–the European Central Bank, in the US, this is the Federal Reserve System, in Japan—the Bank of Japan, in the UK—the Bank of England, in Switzerland—the Swiss national Bank, etc.
The interest rate level is determined at meetings of the national central bank. Then, the decision on the rate is published in official sources. If the central bank of a country reduces the interest rate, the money supply in the country increases, and the national currency depreciates against other world currencies. If the interest rate increases, the national currency will strengthen.
A speech or even a separate statement by a country's leader can reverse a trend. Speeches on these topics may change the currency exchange rate:
All this news is published in various sources. Major international news is more or less easy to find in Russian, but news related to the domestic economic policy and the economy of foreign countries is much less common in the Russian press. Mostly, such news is published by the national media and in the language of the country where the news is published.
It is very difficult for one person to follow all the news at once, and they are likely to miss some important event that can turn the whole situation on the market upside down. Guided by our main principle—to create the best trading conditions for our customers—we try to select the most important news from all over the world and publish them on our website.
The TeleTRADE Department of Analytics monitors news on most national and international news sources on a daily basis and identifies those that can potentially affect exchange rates. These are the main news items that are included in our news feed.
In addition, all our clients have free access to the Dow Jones news feed. This is a joint project of Dow Jones Newswires, the world's largest news agency, and the leading Russian news agency Prime-TASS. The news feed is created specifically for currency traders and those who are interested in getting information about the world's currency markets.
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