Yesterday, we saw another demonstration that financial markets were dull due to the absence of American traders. While the banks in the United States, and along with them, the stock exchanges, did not work on the occasion of a spring banking weekend. The single European currency was allowed to take on some kind of adventure. At first, it declined and then began to grow actively. But the result of all this was that it completed the day exactly on the same values on which it started. And the funny thing is that the scale of all these fluctuations did not cause anything but a grin. So what happened yesterday can only be called stomping on the spot.
At the same time, at first glance, the single European currency had a reason to decline. We are talking about the final data on German GDP, which showed a decline in the economy by 2.3%. Moreover, this is only data for the first quarter, and the restrictive measures introduced because of the coronavirus epidemic began to be introduced only in mid-March. That is, at the very end of the quarter. And just a couple of weeks was enough for the decline in the economy to be quite significant. So it is obvious to everyone that the decline will be even more impressive in the second quarter. However, the depth of the recession does not raise any questions, if one agrees with the assertion that problems in the economy, and the global one, have been observed before. But everyone is only engaged in the fact that they write off everything to the coronavirus. In addition to Germany, Spain shared some news, where the decline in producer prices accelerated from -4.9% to -8.4%. So there are no reasons for optimism. However, everyone remembered pretty quickly that the pace of recession in the German economy is not news, since a preliminary estimate showed exactly the same values. As a result, everything began to go back. Although it was not possible to hit the target the first time, it briefly drove the single European currency a little higher than it should be.
GDP growth rate (Germany):
Today in the morning, the single European currency and the pound began to grow steadily. The market is preparing to publish US statistics on the housing market. At the same time, the pound certainly does not have reasons for growth, since Boris Johnson postponed the date of the opening of the economy once again. If it was stated that the service sector would be open on June 1 just a couple of weeks ago, now this date has been shifted to June 15. So the UK will long come out of this situation, which means that the depth of the economic downturn will be much greater. And this will lead to more bankruptcies and an even more substantial increase in unemployment. So, in theory, the pound should be seriously cheaper now. But market participants are much more interested in what is happening with the American real estate market.
The American real estate market itself has clearly seen better times. For example, S & P / CaseShiller data can show a slowdown in housing prices from 3.5% to 3.0%. However, this data is only for March. But sales of new homes, which may decline as much as 21.1%, already in April. And do not forget that these same sales already dropped by 15.4% in March. Of course, a record low number of sales, 270 thousand, reached in February 2011, cannot be achieved. It is estimated that 495 thousand new homes were sold in March. However, the market went long and hard to record low results in February 2011. And here, we are talking about a rapidly rapid decline in sales. So we should not rule out the fact that we will see new record low sales of new homes in the coming months.
New Home Sales (United States):
The euro/dollar currency pair after it reached the average deviation of the side channel of 1.0775 // 1.0885 // 1.1000, slowed down the movement and, as a fact, formed a pullback towards 1.0940. It can be assumed that the sequence of movement within the framework of the flat formation is still relevant, and therefore, it is possible to expect a slowdown in the region of 1.0940 / 1.0950 with the price returning within the average deviation of 1.0885.
After a long stagnation, the GBP/USD currency pair still managed to show activity, forming a local surge of long positions in the direction of the resistance point on the period earlier, 1.2270/1.2285. It can be assumed that speculative activity will become a local phenomenon in the market, where the area of 1.2270/1.2285 will continue to exert pressure on market participants.
