The euro continued to decline against a number of world currencies after a report showing a larger-than-expected slowdown in eurozone producer prices in February this year compared to March. However, the European Commission's proposal to implement the employment support program was able to partially compensate for losses in risky assets.
As it became known today, the European Commission offers a pan-European employment support program in the amount of 100 billion euros. Under this plan, funds will be borrowed from financial markets, and members of the block will provide guarantees against the funds received. The European Commission also announced further measures designed to allow budget funds to be used to combat the effects of coronavirus and called on the bloc's members to quickly approve a plan to support employment. Such a step during the height of the coronavirus pandemic in Europe should help households to cope with difficult times more calmly while maintaining optimism for early correction of the situation.
The financial supervision authority of Great Britain did not stand aside today, which presented a number of measures aimed at easing the debt burden of borrowers in the event of a coronavirus pandemic. The report says that all borrowers affected by the pandemic will receive support in the form of a short-term financing program. The program will be valid for a period of one to three months, depending on the situation of the borrower.
The authorities also appealed to creditors to freeze payments on loans and credit cards, at least until the pandemic begins to decline, and the economy returns to its normal state. The department noted that credit institutions are allowed to increase overspending for individuals in the amount of 500 pounds without paying interest.
As for fundamental statistics, as noted above, problems in the European currency began to be observed after the report was released, indicating a larger decline in producer prices in the eurozone even in February this year. A reasonable question arises: what will happen in March then?
According to data, the eurozone producer price index (PPI) in February this year fell immediately by 0.6% compared to January and fell by 1.3% year-on-year. The index was expected to fall by 0.4% and 0.7%, respectively. As for the basic indicator, which does not take into account energy prices, it remained unchanged in February compared to January and increased by 0.5% compared to last year. Thus, we can conclude that energy prices are still the key factor pulling inflation down. A sharp recovery in the raw materials market will help to quickly compensate for these losses.
Now a bit about oil. Donald Trump has scheduled a meeting with the heads of major US oil companies tomorrow to discuss measures to support the industry due to a sharp drop in prices. ExxonMobil CEO Darren Woods, Chevron CEO Mike Wirth, and Continental Resources CEO Harold Hamm are invited to the White House meeting. The meeting scheduled for tomorrow gave confidence to the market, which led to a slight rise in oil prices and a rebound from their annual lows.
Another good news was the announcement that the Chinese authorities plan to buy oil in volumes sufficient to meet the country's needs within 90 days. To replenish strategic reserves in 2020, an additional 80 to 100 million barrels of oil will be purchased on the market.
As for the technical picture of the EURUSD pair, the bears will continue to strive to break through the support of 1.0870, which will only strengthen the presence of major players in the market and open the possibility of updating the lows of 1.0780 and 1.0700.
It is not clear how long the growth of oil will last since a small rebound does not indicate that the situation has changed for the better. It is quite possible that the new market reaction will be noticeable following the results of tomorrow's meeting of Donald Trump with representatives of the oil industry. So far, the rebound from the level of 19.25 for the WTI brand to the area of 22.20 dollars per barrel keeps the market optimistic that prices will return to the upper limit of the corridor at 25.00 USD.
