Trump and Putin had a telephone conversation yesterday, discussing the coronavirus pandemic. They agreed to work together with the G20 to increase international efforts in fighting the virus. Special attention was also paid to the global economy, particularly to the energy market. Although the full details of the conversation have not yet been disclosed, some experts said that the two presidents may have talked about easing the US sanctions. Concessions from the US would help stabilize the commodity market, which remains under serious pressure due to a sharp decline in demand caused by the spread of the coronavirus. The White House has repeatedly expressed concerns about the price war between Russia and Saudi Arabia, which brought down the price of black gold in March this year to the lows of the crisis years. After the phone call,
Meanwhile, the dollar continued to strengthen before the release of microeconomic statistics in the Eurozone, which are expected to be released this week. The Bank of America left its forecast to the EUR/USD pair unchanged, and expects it to fall to the area of 1.0200 by the 2nd quarter. The upcoming statistics is expected to affect the European economy much more than the US economy, so the dollar's status as a safe haven asset will quickly return as soon as investors see the real picture.
As soon as Donald Trump signed the $2 trillion package of measures, which aims to help the US economy, American politicians have already begun discussing another aid aimed at limiting economic damage. Given that no one can imagine the losses that the economy will suffer as a result of the pandemic, many experts expect new measures that will be aimed at stimulating economic growth. Increased talk on this issue may put pressure on the dollar in the short term.
As for the fundamental statistics on the US economy, according to the National Association of Realtors, as compared to the previous month, the index of signed contracts for the sale of housing in February increased by 2.4% and amounted to 111.5 points. Economists had expected it to increase by 0.5%. Meanwhile, compared to the same period of the previous year, the index in February rose by 9.4%.
The sharp decline in the manufacturing activity in the area of responsibility of the Federal Reserve Bank of Dallas indicates a deterioration in the prospects for business, due to the pandemic. According to the report, the manufacturing index fell to -35.3 points in March, from its 16.4 points in February. Meanwhile, the index of new orders fell to -41.3 points in March, while the index of orders declined to -44.9 points. All in all, the business activity index in March fell to -70 points against its 1.2 points in February.
The Federal Reserve Bank of New York also published a new weekly economic index yesterday, which tracks the state of the economy in almost real time. The very first indicator fell to the level that corresponds to the crisis of 2008, which is already saying a lot. The extension of the quarantine by Donald Trump in the US will only worsen this indicator in the future.
As for the technical picture of the EUR / USD, the pair remained almost unchanged, as the bears are currently putting pressure on the euro. Fixing below the resistance of 1.1050 will continue the pair's decline today. The sellers of risky assets will focus on the support of 1.0950, and their longer-term goal will be the low of 1.0870. Given the expected fundamental statistics, although the return of the bulls to the level of 1.1050 will lead to the repeated growth of the pair in the area of the weekly high at 1.1150, it is wrong to expect that the risky assets will continue their upward trend .
GBP / USD
Today, the pound declined in the Asian session, after the publication of the report on consumer confidence in the UK, which deteriorated in March this year. It is clear that many Britons are seriously concerned about the coronavirus pandemic, which will cause significant damage to the country economy. According to the data, the UK consumer confidence index in March 2020 fell to -9 points, and the sub-index of economic expectations for the next 12 months fell to -27 points. As a result, economists predicted the indicator to decline to -18 points, however, at the opening of the European session, the pound regained most of its positions against the dollar.
As for the technical picture of GBP / USD, it seems that the traders of the pair are now confused and do not know what to do next, as the desire to buy the pound, after such a rapid growth, has decreased, and no one is in a hurry to sell it. A break in the support of 1.2310 will increase the pressure on the pair, and lead to its decline to the lows of 1.2150 and 1.1970. Growth will be limited by the resistance level at 1.2490, but a break above it will open the way to the highs of 1.2690 and 1.2780.
