Today, the market activity was boosted by the news about a new round of trade war between China and the US. Moreover, European countries published a lot of important macroeconomic reports.
In France, inflation dropped to 0.3% from 0.7% in the given period. However, economists had forecast a decline to 0.4%. At the same time, on a monthly basis, consumer prices remained unchanged whereas in the US, there was a decrease.
In Italy, the third largest eurozone economy, inflation shrank to 0.0% from 0.1%. Deflation is likely to be inevitable under the current conditions.
At the same time, the largest eurozone economy revealed rather poor GDP data. According to preliminary estimates, the country’s GDP fell by 2.3%. Economists had predicted a deeper drop of 2.6%.
Germany’s GDP data is of primary importance as it correlates with the European figures. Thus, according to preliminary estimates, the European economy shrank by 3.2%. The report reflects the economic situation in the first quarter. The fact is that the restrictive measures were imposed only in the middle of March that is almost the end of the quarter. Thus, such a short period of lockdown measures caused the economic slump. It means that the European economy was weak even before the coronavirus outbreak.
The euro/dollar pair once again approached the level of 1.0775. After that, the pair slowed down and rebounded. If the price consolidates above 1.0825, it may hit the level of 1.0850 due to the current support. Otherwise, the quote may fluctuate within the levels of 1.0775/1.0825 for a short period of time.
Buy positions can be opened above 1.0825 with the target at 1.0850.
Sell positions can be opened below 1.0760 with the targeted level at 1.0730-1.0700.
The pound/dollar has been dropping for the eleventh day in a row. The pair managed to break the low logged on April 21st and approached the control level of 1.2150. If the price consolidates below 1.2140, the pair may continue the downward movement to the psychological level of 1.2000. According to the alternative scenario, the pound/dollar pair may rebound from the control level of 1.2150. However, the main trend will remain unchanged.
Investors are waiting for the US statistical data, especially for the retail sales report. Retail sales reflect the services sector condition. In the US economy, 80% of GDP is generated from this sector. However, the forecasts are rather alarming. In March, the US retail sales fell by 5.8%. In April, economists expect a drop of 16.3%. It could be the worst result in the last 25 years or even more. Similar figures were logged only during the Great Depression.
A bit later, the US will disclose its industrial production data. The indicator may tumble by 16.4% compared to a decrease of 5.5% in the previous period. It could be the weakest report since the end of the Second World War. But then, the slump occurred because there was no need to produce a large number of tanks, aircrafts, and ships any more. So, since the Great Depression, it is the first significant drop. As a rule, the US dollar loses ground amid poor figures. However, recently, the greenback either rises or ignores such data.
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