Trading plan for EUR/USD and GBP/USD on 04/28/2020

Yesterday, the market observed almost exemplary standing in place. And of course, I want to write off all this to the initial absence of any significant macroeconomic data. Nevertheless, there was plenty of news even without this. What does it cost to exceed the mark of 3 million confirmed cases of coronavirus infection? The United States will most likely overcome the mark of 1 million cases of infection today. However, we can say that markets are gradually getting tired of the news regarding the coronavirus epidemic. Moreover, they are talking more and more about the gradual lifting of restrictive measures. However, most of them talk about this in Europe, sometimes supporting these words with real steps to soften the self-isolation regimes. Therefore, the main issue now is not the spread of the epidemic, but the economic collapse, whose scale is still difficult to assess. Well, the most important question is how long the world will get out of this hole. And although we have not yet fallen into it to the end, the world is still in a state of free fall. Many hope that the end of the epidemic and the lifting of restrictive measures will be the end of this very fall. At the same time, do not forget about the upcoming meetings of the Federal Committee on Open Market Operations and the European Central Bank this week. The market does not know what to expect from their results. It is highly likely that it will be announced the possibility of introducing additional incentive measures. Perhaps a reservation will be made about a further reduction in interest rates. Nevertheless, market participants clearly do not intend to take risks.

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However, despite the absence of any pan-European or American statistics, investors have received yet another confirmation that the global economic downward turn will be much more significant than everyone could imagine. In France, a historical record was set for the number of applications for unemployment benefits, which increased by 243 thousand. They predicted growth by 150 thousand, which in itself is almost double the record set in 2009. So the assumption was confirmed that if there is an unprecedented increase in unemployment in the United States, then exactly the same thing will happen in the rest of the world. The worst thing about all this is not even that unemployment is growing at a record pace, but that it will inevitably lead to a prolonged crisis, from which the world economy will have to get out of for many years.

Change in the number of applications for unemployment benefits (France):

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It has been repeatedly stated that everything that is happening now is accompanied by a mass flight of capital to the United States. It is strange for the simple reason that the largest mass of investment capital in the world is controlled by American funds and banks. WWell, in the conditions of global confusion and global crisis, large investors are beginning to look for ways to save their capital. And in such circumstances, anyone will decide to store funds where they think it is most secure. And when everything is bad and terrible everywhere, the safest place is your home. Here are the capitals and flee to the United States. Moreover, almost no one doubts that the global economic recovery will begin with the United States. So it is better to place money in advance where it will grow faster. But this process is still ongoing. For instance, the yield on 2-year government bonds decreased from 0.398% to 0.229%. However, earlier there was a strong decrease in the yield of short-term securities. This indicated that investors were counting on a relatively quick end to the global crisis. Now, we got to the relatively long ones. In particular, the yield on 5-year government bonds fell from 0.535% to 0.394%. And this looks pretty daunting, as it suggests that investors are already starting to assume that the crisis will be somewhat longer and we will go out of it for several years.

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Today, in fact, only American statistics can somehow influence the market. There is simply no other. However, we are not talking about the February S & P / CaseShiller data on housing prices, the growth rate of which should remain unchanged. This is the data for February, not March. But the data on wholesale stocks are of much greater interest, since they are just March. They can show a 1.0% increase in inventory. Of course, this is not a record growth. It is not even so impressive. However, against the background of the current situation on the labor market and the catastrophic drop in consumer demand, overstocking of warehouses suggests that industry will begin to recover with a strong delay .And this will have a negative impact on the entire process of restoring the American and, along with it, the world economy. In other words, the crisis will clearly be prolonged.

Wholesale Stocks (United States):

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The euro/dollar currency pair returned to the level of 1.0850 during the correction, where the quote slowed down and formed a slight stagnation, with a variable range of fluctuation of 1.0815 / 1.01860. It can be assumed that the movement within the given boundaries will continue in the market, where the main tactic will be considered a breakdown of one or another of the range of 1.0815/1.01860.

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The pound/dollar currency pair managed to concentrate on the values of 1.2400 / 1.2450 after the local upward jump, where the activity declined significantly, and the quote switched to sideways movement. It can be assumed that the existing fluctuation within 1.2400 / 1.2450 will remain in the market, where the best tactic will be considered a breakdown of the specified framework: 1.2400 ---> 1.2350; 1.2450 ---> 1.2500.

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The material has been provided by InstaForex Company - www.instaforex.com