The reaction of EUR / USD to the release of data on the American labor market has become an excellent illustration of market sentiment: stock index rallies are not thanks to, but despite the terrible macro statistics in the United States, the US dollar is drowning, but as soon as the euro recalls its own problems, the main currency pair falls. An increase in unemployment to 14.7% and a decrease in employment by 20.5 million did not surprise the S&P 500 at all. The forecasts of Wall Street Journal experts looked darker (16.1% and -22 million), many believe that April is the worst month in terms of job losses during a pandemic, and if the worst is behind, why not buy stocks?
I would like to go to heaven, but sins are not allowed. The growth of US stock indices was enough to strengthen most of the G10 currencies against the greenback, but the euro was blown away very quickly, recalling its own problems. The split in the eurozone, which started after the governments of the currency block countries could not give the green light to the coronabond, and worsened due to the verdict of the German Constitutional Court, is a trump card in the hands of Euro skeptics, increasing the risks of the eurozone collapse. Italy is not Greece or other small states, because of which fire previously blazed in the Old World.
The magnitude of the monetary and fiscal stimulus is insignificant compared to the United States, which suggests a slower recovery of the GDP of the currency block than the US economy and casts doubt on the growth of EUR / USD. Yes, eurozone finance ministers managed by the end of the week by May 10 to decide on emergency support of up to 2% of the GDP of each of the affected countries. ESM will provide loans at a negative rate, which, taking into account the fees charged, will be about 0.1%. This means that Italy and the currency bloc as a whole were thrown dice in the amount of € 36 billion and € 240 billion - a drop in the ocean compared to $ 3 trillion, a fiscal stimulus in the States, which, by the way, can be expanded by the end of May or at the beginning June. Negotiations between the White House and Congress are underway, but Steve Mnuchin believes
It is curious that the derivatives market does not particularly believe that EUR / USD will be able to update the March minimum near 1.063. Options traders understand that the support of the euro is provided by US stock indexes and factors of long-term weakness of the dollar, including an excessive increase in the Fed balance sheet and the US budget deficit.
Volumes of option contracts
Meanwhile, the European Court retaliated against its counterparts in Germany, who recognized his decision on the legitimacy of the ECB's quantitative easing program as invalid. The EU Court noted that its purpose is to ensure that the legislation of the European Union is properly applied in the entire bloc from 27 countries. He alone has jurisdiction to determine that an act of an EU institution is contrary to EU law. On the one hand, such a statement frees up the hands of the ECB; on the other hand, allows Eurosceptics to raise their heads. Bulls on EUR / USD understand the vulnerability of their positions, but continue to believe that the S&P 500 will allow them to stay above 1.08.