Market made gains yesterday but were hamstrung on occasion by delays in the US Senates passing of the coronavirus bill and by the release of economic data that shows the impact that the measures taken to slow the spread of the virus is having on the economy. The drip feed of rising cases and growing numbers of deaths from the virus has slowly eroded appetite in markets for additional risk. However the Bill was passed unanimously by the Senate which will now go on recess for a number of weeks until 20 April. There is a provision for the Senate to be recalled at 24 hours notice should the need arise. The Bill will now pass over to the House of Representatives to be voted on. It is believed that it will pass to the House unopposed. House Speaker Polosi has said that the legislation has strong bipartisan support and a vote will take place tomorrow. It will then go to the President to be signed into law. The number of cases in the US has increased by more than 12,000 to over 68,000, with the death toll surpassing 1,000. The number of cases in New York rose to over 33,000 with 280 dead. The release of US Unemployment Claims later today is expected to show a massive increase in the number of Americans out of work. Conservative estimates put the number around the 1M mark but the forecast is expected to register 1.6M claims. On the upper extreme end of the scale there are estimates of around 4M Americans out of work. This is one of the most anticipated Unemployment Claim releases in recent times and presents a real increase in risk for traders ahead of the US open. The expectation is for a record spike in claims today and the concern is that this number may be higher again next week. Also today the Bank of England’s Monetary Policy Committee is expected to meet and release its Bank Rate decision and Monetary Policy Summary. The Asset Purchase facility is expected to be maintained at the higher rate of £645B, while the Bank Rate is expected to be left unchanged at 0.10%. However the Bank may comment or announce new measures to cushion the UK’s economy from the disruption caused by the virus. UK Retail Sales are showing a decline to -0.3% from 0.2% expected and a revised 1.1% previously. Gold is trading at 1598.00 while USDJPY is trading at 110.400.
This morning the ECB will release its Economic Bulletin. In the afternoon, the BOE will release its rate decision. Later the US Unemployment Claims data will be released along with US Final GDP.
The USDJPY has recovered after it found support at the 101.180 level with a move that took price up to resistance at 111.715 this week. The pair has made a V-shaped recovery move higher after it dramatically sold off. Price fell sharply but has recovered equally sharply to trade above the 110.000 level with support at 109.680. In the short term the 110.000 area is acting as support. The 109.000 may be used as support in the event of a loss of this area. A test of this level and a failure to find support may open the way to the 107.680 area, which might lead to further selling taking hold and pushing price into the support area around the 105.600 mark followed by 105.000. A selloff in August found support at 104.450 and produced the rally to the current high at 112.228.
In the short term the 111.700 area is now acting as resistance, with the 112.000 area above it. A consolidation above the 108.000 level may seek to take price up to engage the area around the 112.000 round number. This area has acted on price in the past and was retested as resistance in February, with a high at 112.227. A break above this area may open the path to the pair potentially attempting to gain a foothold above this resistance and establish a base to engage the 113.000 area. A break above this level may seek to test the 114.000 level followed by the potential resistance at 115.000.
The EURGBP chart is showing the pair is consolidating in a range from 0.9500 to 0.9000. The pair traded up to the 0.9500 area and found resistance. The pair used the support at 0.9000/0.9070 to build a base and break back higher. The price is currently around 0.9195. A loss of this level may push price down to 0.9100 or 0.9000. Price may potentially remain above this area with further support around 0.8850. Support may be seen at 0.8750 followed by 0.8620/0.8600. Below this level, the 0.8500 area may be supportive again, followed by the 0.8412 area, the low at 0.8276 from December and then the 0.8250 level.
The 0.9300 level may now form as resistance going forward, followed by the 0.9388 level ahead of 0.9500. A break higher may seek to test the 0.9550/0.9560. Beyond this the potential resistance area at 0.9620 might be used ahead of the 0.9700 level. The next area of interest may be found at 0.9720, followed by 0.9750 which may also be used as resistance to any potential move higher, while above the area the 0.9800 area may further resist attempts to push price up to the 0.9900 level. The round number level may also come into play at 1.0000.