Everyone was preparing so intensely for the next sign of the Apocalypse that it did not happen, there was no limit to disappointment. We can say that the market simply froze in surprise, although yesterday was not boring since the published macroeconomic data were quite interesting including those that seemed to be the next confirmation of the approaching End of the World. And of course, you can not ignore the external background in the form of an epidemic of coronavirus. Like it or not, but this plague adds confusion to this whole story. Moreover, yesterday, Spain came in third in the world in the number of confirmed cases of coronavirus infection, and their number exceeded one hundred thousand. At the same time, the Europeans immediately declared that they had already passed the peak of the epidemic. It makes no sense to somehow comment on such statements, for in the United States, a new record was set for the number of confirmed cases per day after similar slogans. In general, let's see how events will develop. In any case, such news scares investors who really do not understand where to run and where to hide their hard-earned money.

But let's go back to our favorite macroeconomic statistics, which really brought a lot of surprises yesterday. As this often happens, the final data on business activity indices turned out to be slightly different than the preliminary estimates showed. The pan-European index of business activity in the manufacturing sector fell from 49.2 to 44.5, not to 44.8. However, the scale of the decline is so large that such a slight difference between the actual data and the preliminary ones does not make much weather. So there was no reaction either. If we look at the context of the largest economies of the euro area, then the index fell from 48.0 to 45.4 (preliminary estimate 45.7) in Germany, from 49.8 to 43.2 (preliminary estimate 42.9) in France, from 48.7 to 40.3 (preliminary estimate of 40.0) in Italy, and from 50.4 to 45.7 (preliminary estimate of 43.0) in Spain. It turns out that the index of business activity in the manufacturing sector only in Germany declined slightly more than anticipated. In other major countries, they declined slightly less, but the pan-European index fell more than the preliminary estimate showed. And with all due respect to Germany, its weight is still not so great as to do such tricks alone. On the other hand, the situation with the index of business activity in the manufacturing sector is much worse in the smaller countries of the euro area. But the data on the unemployment rate presented an unexpectedly pleasant surprise, as it fell from 7.4% to 7.3%. However, the data themselves are only for February, and in March the picture will obviously not be so joyful. Another thing is that the continuing trend towards a decrease in the unemployment rate inspires hope that the coronavirus epidemic will not hit the labor market in Europe so much than in the United States. Say what you like, but European countries are distinguished by their serious social policies, and the tools they have may well smooth out the situation. It is worth noting that the unemployment rate is declining throughout Europe. So, in Italy, it decreased from 9.8% to 9.7%, although they expected its growth to 10.2%. But the surprises do not end there, as the growth rate of retail sales in Germany accelerated from 2.1% to 6.4%. And not only that, sales growth was quite impressive, but they also expected a slowdown to 1.2%. And of course, it is quite possible to say that such a surge in sales was caused by the coronavirus and the desire of people to create food stocks and everything necessary for the time of forced sitting at home. But the fact is that this is data for February, while the coronavirus hit Europe only closer to mid-March. After all, it was not just that they predicted a slowdown in sales growth. Therefore, there were enough surprises and pleasant surprises.

Unemployment Rate (Europe):

The United Kingdom reported exclusively on the index of business activity in the manufacturing sector, which declined from 51.7 to 47.8. The final result was slightly worse than the preliminary estimate, which showed a decrease to 48.0. But again, the overall scale of the decline is such that such insignificant discrepancies between the preliminary estimate and the final data do not play any role whatsoever.

Manufacturing Business Activity Index (UK):

Despite all this, only a pound behaved normally, which simply stood still, while the single European currency showed a fairly confident decline although not strong. Thus, market participants were preparing to publish ADP employment data, the forecasts for which were quite frightening. Quite often, quotes on the market go in the opposite direction from the tonality of forecasts before the publication of certain important macroeconomic data. That is exactly what happened yesterday with the single European currency, because employment in the United States was to be reduced by 170 thousand. Well, it is clear that, combined with a record increase in the number of initial applications for unemployment benefits, this should really be evidence of the beginning of the economic Apocalypse. However, it turned out that employment decreased by only 27 thousand. And it surprised everyone so much, that the market literally froze in place, not understanding what he should do now. Apocalypse seems to be canceled. But the data itself is rather strange and does not fit into the framework of formal logic. After all, if an absolute historical record was set for the number of initial applications for unemployment benefits, then employment should have decreased quite significantly. The trick is that data on employment for the month, and applications for the week. Thus, such discrepancies are possible only if employment has grown terribly for almost the entire month. So yes, a similar result is possible. But here, it is hard to believe, because this very employment had to grow at some simply incredible pace during the first half of the month which is almost impossible. In other words, there are a lot of questions about ADP data. The surprise was so strong that no one noticed the final data on the index of business activity in the manufacturing sector, which showed a decrease from 50.7 to 48.5. But a preliminary assessment showed a decrease only to 49.2. It can be noted that the scale of the decline is much smaller than in Europe, so such discrepancies between the preliminary estimate and the final data should have done their dirty job. However, investors were keen on thinking about employment data.

Employment Change from ADP (United States):

It's clear that after such strange employment data, the market will now look forward to data on applications for unemployment benefits in the hope that at least they will somehow clarify the situation. And against this background, no other data is playing any role. But Nationwide, with a delay of a week, the change in housing prices in the UK was finally calculated, and reported that the growth rate of these same prices accelerated from 2.3% to 3.0%. It was expected that they would slow down to 2.1%. And this is the data for March. That is, it turns out that in the first half of the month everyone was actively buying up real estate, which led to an increase in prices. Or does Nationwide want to tell us that Her Majesty's subjects, while sitting at home, did not find anything else but to engage in the online purchase of a house in the country? In any case, the result is quite strange, since the demand for real estate cannot increase now.

Nationwide Housing Price Index (UK):

Meanwhile, Spain showed data on changes in employment, and they clearly tell us that Europe is unlikely to be able to avoid a catastrophe in the labor market. The number of unemployed increased by 302.3 thousand and this is the data for March. Although this is not a record set at the beginning of the zero, but the movement in the right direction. In any case, there has not been a similar increase in unemployment in Spain since the mid-zero. A little later, data will be published on producer prices in the entire euro area, which should show a deepening of the decline from -0.5% to -0.7%. Well, this is a serious pressure on inflation. Thus, the European Central Bank will have another reason to think about the possibility of lowering the refinancing rate.

Producer Prices (Europe):

So, the focus today is only on data on applications for unemployment benefits in the United States. And not only primary ones, which should be 3,180 thousand, that is, 103,000 less than last week. Repeated applications, which may be as many as 4,920 thousand, are of no less interest. Unlike the number of initial applications that are at a historic maximum, this is not a record. The record was set in 2009, so it may seem that there is no cause for concern. However, I remind you that no one expected such a rapid increase in the number of initial applications, and the data on repeated applications just for the same week. That is, on March 21. On exactly the same date, the report on initial applications showed that catastrophic growth. Moreover, the increase in the number of repeat applications has never been accompanied before by a similar increase in the number of primary. In other words, this can only be the beginning. And there is every reason to believe that the situation will only worsen, since the number of new cases of coronavirus infection in the United States began to grow even faster after March 21. Obviously, this will affect the labor market very, very seriously. Small entrepreneurs, who in aggregate give the largest number of jobs, are trivially ruining right before our eyes. They are critically dependent on the flow of customers, which now no longer exists.

Repeated Unemployment Insurance Claims (United States):

During the corrective movement, the euro/dollar currency pair managed to go down to the area of the level of 1.0900, where a variable support was found and, as a fact, a stop with a pullback. It is likely to assume that in the case of fixing the price higher than 1.0970, we will open the way towards the range of 1.1030-1.1065.

The pound/dollar currency pair continues to focus within a wide range of 1.2280 / 1.2485, where activity has fallen significantly. It is likely to preserve the existing boundaries, where local long positions may arise in case of price fixing higher than 1.2440, with the move to the frame of 1.2485. We consider the main transactions after the breakdown of borders, while alternative operations are considered below a variable level of 1.2350.