Euro dollar forex forecast EURUSD 05/11/2020
Unexpected news came from the European Central Bank. The regulator asked employees to examine whether the regulator should buy junk corporate bonds amid the need to help the economy cope with the consequences of the COVID-19 pandemic. The inclusion of corporate debt, whose rating was recently downgraded to a speculative level, in ECB purchases of 1.1 trillion euros for this year will help the regulator reduce the cost of borrowing for companies that have been hit hardest by the coronavirus. How this process will affect the value of the euro is a clearly negative signal for the European currency. However, similar operations are already underway in the United States. And here we get a vicious circle: these processes have a negative impact on both the euro and the dollar. Who will lose the most? It’s hard to say. What are the current positions in the euro? It is advisable not to trade the European currency until the appearance of stronger signals. Alternatively, you can choose to trade gold, where there is a good uptrend. Market participants should wait for the growth of XAUUSD quotes in the area of 1730. Why gold? The euro and the dollar lose their attractiveness from the actions of central banks, and gold in such periods, on the contrary, increases its value as the most reliable means of protecting capital. Why gold? The euro and the dollar lose their attractiveness from the actions of central banks, and gold in such periods, on the contrary, increases its value as the most reliable means of protecting capital. Why gold? The euro and the dollar lose their attractiveness from the actions of central banks, and gold in such periods, on the contrary, increases its value as the most reliable means of protecting capital.
Trading recommendation: flat 1.0800 -1.0870
Forex forecast GBPUSD for today 05/11/2020
The published US labor market report for April came out quite interesting. High unemployment was recorded - the rate was 14.7%. At first glance, this is bad, even catastrophic, because it signals not just about a recession, but about a whole depression in the largest world economy. But if you look at the report more closely, you can see a high level of average earnings - the figure in April was 7.9% yoy, against 3.3% yoy in March. A paradoxical situation is that people lose their jobs, while wages increase. World has gone mad? No! The thing is that, first of all, employees with low salaries and low qualifications lost their jobs, and the rest of the employees both work and work. As a result, average earnings so sharply increased.
But here it’s necessary to make an amendment, as many people with low salaries voluntarily quit their jobs, because the American government offers good compensation for 4 months. People went on vacation, but not for a month, as usual, but for four, and the US Treasury pays for this vacation. Then, the logical question arises: where does the Ministry of Finance get so much free money from? The Ministry of Finance has no free money, but it has the opportunity to issue treasury bonds, which in turn is bought by the Fed, printing dollars. The circle is closed. What will happen next? The process will be repeated again: the Ministry of Finance issues bonds that the Fed buys, then the Ministry of Finance receives dollars and gives them to the population. How will this situation affect GBPUSD? For the dollar, this is a negative signal and against this background, the pound may show growth.
GBPUSD recommendation: Buy 1.2390 / 1.2370 and take profit 1.2445
Dollar yen forex forecast USDJPY today 05/11/2020
The balance of the US Federal Reserve rose to another historic high of $ 6.72 trillion. Now the balance is 31.2% of US GDP. The previous peak was at the beginning of 2015, when the balance sheet amounted to 25% of GDP. Since the US Ministry of Finance announced an increase in bond issues in the next two months, this figure will show growth, since the Fed will be the main buyer of treasury bonds. For the USDJPY currency pair, this is a twofold situation. On the one hand, we can expect a drop in quotes since, the larger the Fed balance, the lower the dollar exchange rate. On the other hand, we can expect the growth of quotations, as the USDJPY pair strongly correlates with the US stock market, which in turn will show growth due to an increase in the Fed balance sheet. What to do in this situation? Now it’s advisable to increase Buy positions on the stock index # SP500 with the target at 2970, and not to trade on the USDJPY pair yet.
USDJPY recommendation: flat 106.45 -107.35