This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.
What do you need to know on May 12?
Main movements on the market: risk-off mood strengthened USD, AUD dropped on China’s imports’ ban and Saudi Arabia cut oil production.
USD and stocks ahead of fear of the second wave
Today the market sentiment is quite risk-averse. There are some fears of the second wave of coronavirus infections. On the one hand, it’s awesome for the US dollar and the Japanese yen. On the other hand, it’s terrible for stocks, but not for all of them, the Nasdaq stock gained as biotech is in high need these days. Goldman Sachs expected that S&P 500 can contract by almost 20% in the next three months.
AUD fell under pressure of Chinese import ban
The Australian dollar went down after China had stopped imports of meat from four Australian producers, perhaps, it was the response to the Australian calls the COVID-19 outbreak inquiry.
AUD/USD has been moving up since March 23, but it seemed it takes a pause now. If it breaks through the resistant line at 0.653, it will continue increasing up to 0.667. However, if it crosses the support level at 0.64 it can fall further to the next support at 0.628.
Saudi Arabia announced cut of oil production
Oil stabilized after Saudi Arabia claimed it would reduce output. Saudi Arabia made a decision that it would further slash production, going beyond the OPEC+ agreement. Moreover, there are first signs of recovery of oil demand, that is also beneficial for the oil upper price.
The WTI oil price is slightly above the 50-day moving average. If it is strong enough to break through the 26.00 mark, it will open doors towards the next resistant line at 29. Support is 20.00.
S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.
The United States Bureau of Labor Statistics will publish the US Consumer Price Index (CPI) m/m on January 12 at 15:30 GMT+2. The index measures a change in the price of goods and services purchased by consumers.
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The RBA and the Bank of Canada will add volatility to the AUD and the CAD, while USD is expected to be boosted by the Non-farm payrolls.