Week in a glance: riots in the USA, NFP, ECB billions and OPEC+

8 มิ.ย. 2020

Last week was extremely busy both in terms of price dynamics in the financial markets and the news.

The main political theme was protests in the United States and a sharp decrease in Trump's ratings against this background. All these put pressure on the dollar and brought the Dollar Index to the lowest levels since March.

However, not everything was so gloomy for the American currency. At first, data from ADP, and then official statistics in the form of NFP figures showed that the US labor market can not only rapidly fall into the abyss, but also recover quite quickly. At least +2.5 million new non-farm jobs, with the forecast of a decrease in their number by 8 million - this is definitely the strongest positive surprise markets can even imagine. And unemployment rate came out much better than experts expected (13.3% with forecasts of about 20%).

In our opinion, this is quite enough for the dollar to stop a protracted fall. So this week we will search for buying opportunities of the dollar (with insignificant stops per each position of course).

First of all, we are interested in selling the GBPUSD pair, since the negotiations on Brexit last week ended in nothing. The sides were extremely disappointed with eachother. And this is the best background for pound sales.

Note that such data from the United States is not enough for further growth of the US stock market. In the end, if we summarize the data on the NFP for the last 2 months, then we get a figure of -18 million (!). This is much more than the US labor market created in the previous 10 years. And unemployment, which is 3 times higher than the pre-pandemic level, does not mean that everything in the US economy is excellent. So, this week we will continue to sell in the US stock market.

The past week can be considered the week of the euro. And for this, there were many reasons: active reopening of the Eurozone economies, the ECB decision to radically expand the program of quantitative easing, increased it by another 600 billion euros and brought the total volume to 1.35 billion euros. In addition, the decision of the German government to allocate 130 billion euros to help the country's economy was also a powerful positive signal.

This week we tend to give preference to purchases of the euro, but we will not buy at the maximum, and will do at the time of local corrections.

Another important event of the past week was the OPEC + meeting. On the agenda was the issue of extending the period of decline in production by 9.7 mln b / d. The meeting was scheduled for Thursday, but was rescheduled for Saturday due to non-compliance with the agreement by a number of countries, in particular Iraq and Nigeria. At the end of the weekend, oil producers agreed to cut total production by 9.7 million bpd in July. For oil, this is generally a positive signal. Nevertheless, we continue to expect the beginning of correction in the oil market and therefore temporarily avoid purchases.

As for the upcoming week, it will be much calmer, so in theory nothing should prevent them from realizing the positions that we have outlined for the week. The main events will be the FOMC Fed meeting on Wednesday, as well as data on the GDP of the Eurozone, Japan and the UK.