Events to watch out for today:
15.30 Moscow time. USA: change in the number of people employed in the non-agricultural sector.
Forecast EURUSD today 05/08/2020
Today, the United States will release its April labor market report. The fact that the data will be weak no one doubts. The financial media over the past month have tried to seriously scare traders with the specter of the Great Depression. How will the market react to the Non-Farm Employment Change report today? In my opinion, neutral. Weak data has already been taken into account by the market, and a small portion of the positive will not be able to change the trend. There are no “drivers” for any trend in the main currency pair. This “driver” is in gold, which in turn may provide little support for the euro, due to the direct correlation of the two instruments. Historically, investors perceive gold and the euro as the main competitors of the US dollar. Why do investors believe in gold? This precious metal has historically benefited from negative real yields on US government bonds. For example, now American 10-year bonds give a yield of 0.65% with inflation in the States of 1.5% - as a result, a negative yield of 0.85%. As long as bond yields and inflation in the United States do not equal or are close to each other, we will observe an upward trend in the gold market.
EURUSD recommendation: flat 1.0800 -1.0880
GBPUSD Forecast today 05/05/2020
The British currency may complete the last trading day of the week on a major note. Firstly, the pound has seen positive dynamics in the debt market: the yield on 10-year UK government bonds is growing in relation to its counterparts from the USA and Germany. On the eve of the Bank of England announced the results of its meeting on monetary policy and did not increase the program of quantitative easing, which encouraged participants in the debt market, who were initially pessimistic and expected an increase in asset repurchase in the amount of 20 billion pounds. Secondly, I expect the bullish trend to continue in the oil market, which will provide the pound with additional support, since historically the two assets are well correlated. China is increasing purchases of oil and natural gas, and Saudi Arabia raises its oil prices for customers from the European Union. Two of these factors support the oil market.
GBPUSD recommendation: Buy 1.2370 / 1.2350 and take profit 1.2425
USDJPY forecast today 05/05/2020
Bullish rallies in the precious metals market, together with weak macroeconomic statistics from the United States on the labor market for April, form a negative trend for this currency pair. Low yields on government bonds in the G-7 countries do not leave investors any choice but to actively buy gold on corrections. I note that government bond yields will remain at low levels for a long time, since all the world's leading central banks only do that they print money every day and redeem bonds for them. There is a simple rule in the bond market: if you buy these instruments in large volumes, their profitability is reduced. Now we are dealing with just such a situation - Central banks are actively buying up bonds in large volumes. The US Federal Reserve and the Bank of Japan are starring here.
USDJPY recommendation: Sell 106.54 / 106.75 and take profit 106.15