15.30 Moscow time. USA: Change in the number of people employed in the non-agricultural sector in May.
Forex forecast EURUSD for today 06/05/2020
Today, two factors can be distinguished that will affect the course of trading. Firstly, the dynamics of the interbank lending market in London indicates the continuation of the uptrend in this currency pair. The benchmark three-month Libor rate has been at a low since November 2015, and the downtrend is only gaining momentum. This process logically fits into the downtrend on the USDX dollar basket index, where on June 1 it successfully overcame a strong support level of 98.34. The next level is located at 94.61. In terms of EURUSD, this is the level of 1.1550. Secondly, on the eve of the ECB announced an increase in the incentive program by 600 billion euros, with consensus market forecasts of 500 billion euros. The total repurchase of assets will be 1.35 trillion euros, coupons on bonds will be reinvested, thus, incentives will exceed the indicated amount. The completion of the program is scheduled for late 2022. For the euro, this is a negative signal, since the expansion of the program turned out to be more than the market initially expected. Today's report on employment in the US non-agricultural sector, in my opinion, will not cause a strong market reaction. The consensus forecast of economists at investment banks with Wall Street suggests a decrease in employment by 8 million people. Publication of negative data will not particularly upset anyone, since all investors understand that now, on June 5, it is too early to expect employment growth. The negative report is largely taken into account by market participants. What do we have in the dry residue? There are identical negative factors for the euro and the dollar. What to do in this case? In my opinion, it’s now advisable to take a wait and see position on the main currency pair, you can buy the DAX30 German Stock Index. Why? An increase in the ECB's stimulus program is negative for the euro, while positive for the stock market.
EURUSD recommendation: flat 1.1325 -1.1400
GBPUSD forecast and analysis today 06/06/2020
We open Buy positions for two reasons. Firstly, the positive market dynamics of the interbank lending market indicates the growth of pound quotes. At the interbank in London, there has been a fall in interest rates on dollar loans - bankers do not show much interest in the US currency. There is a lot of dollar liquidity in the banking system. Thanks to the US Federal Reserve for caring! Secondly, the upward trend in the oil market will provide the pound with additional support, since historically the British currency correlates with BRENT oil. OPEC expects the deal to reduce production by the OPEC + alliance countries will lead to a deficit of oil supply in the third quarter of 2.8 million barrels per day. In the fourth quarter, the deficit will more than double to 6.1 million barrels per day. For oil prices, it's like a “balm for the soul."
GBPUSD recommendation: Buy 1.2640 / 1.2620 and take profit 1.2680
Dollar yen USDJPY forecast today 06/05/2020
The inflow of capital into risky assets allows you to buy this currency pair. Central banks of the G-20 countries continue to actively print money to stimulate economic growth during the COVID-19 pandemic. This week, Germany approved an additional fiscal stimulus of € 130 billion, representing 3% of GDP. The ECB has increased the volume of special programs for the repurchase of assets by 600 billion euros. Earlier this week, the People's Bank of China decided to allot 400 billion yuan to buy out small business loans from small and medium-sized banks. All these billions inspire investors to buy risky assets, which is positive for this currency pair, since it strongly correlates with stock markets.
USDJPY recommendation: Buy 109.15 / 108.99 and take profit 109.40