Archives of “April 29, 2020” day

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USD/JPY tests next key support as dollar remains weak

  
Analysis, Forex

USD/JPY runs into the 50.0 retracement level of the recent swing move higher back in March

USD/JPY D1 29-04

That level sits at 106.45 and will be a key daily support to watch before a potential drop back towards 105.00 next in the pair. The shove lower comes as the dollar is continuing to stay weaker across the board in European morning trade.
Despite some recovery in the dollar late yesterday, the fact that USD/JPY failed to reclaim 107.00 continues to give sellers the advantage from a technical perspective.
And so far, sellers are continuing to keep up the momentum in trading today.
The mood in equities is still more or less the same with European stocks holding mild gains with US futures up by around 0.7% currently. Meanwhile, the bond market is telling a different story with US 10-year yields down by about 2 bps to 0.593%.
For now, the daily support at 106.45 will be key for USD/JPY sentiment. A firm run below that will see little in the way of stopping a move back towards 105.00 potentially.
The risk for sellers is if buyers start to chase a move back above 107.00.
Looking ahead, the Fed will be the key risk event to watch today so let’s see if there will be more market clarity once that is over and done with.

North Korea has extended its COVID-19 national emergency to the end of the year

  
Analysis, Politics

Radio Free Asia with the report, an unnamed source

  • a senior official in North Pyongan province, who requested anonymity due to fear of reprisal
“On the 23rd, the Central Party ordered the provincial quarantine command to extend the national emergency quarantine posture through the end of the year”
“[They] ordered stronger quarantine measures in response to the prolonged outbreak” 
NK was slow to admit they had an outbreak. At least publicly.
Radio Free Asia with the report, an unnamed source

Fitch downgrades Italy to BBB-, stable outlook

  
  Analysis
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Fitch Ratings agency says the downgrade reflects the significant impact of the COVID-19 pandemic on Italy’s economy and fiscal position

  • expects Italy’s govmt debt to GDP ratio to increase this year, by around 20%
  • Fitch forecasts an 8% GDP contraction in 2020
  • says Italy’s gross general government debt to GDP ratio will increase by around 20pp this year
  • stable outlook partly reflects view that ECB’s net asset purchases will facilitate Italy’s substantial fiscal response to covid-19 pandemic
  • downward pressure on Italy’s rating could resume if government does not implement credible economic growth & fiscal strategy
  •  says recession & economic policy response to covid-19 pandemic will result in sizeable deterioration of Italy’s budget balance this year
This is a negative input for euro
Link to Fitch for more … note this:
  • In accordance with Fitch’s policies, the issuer appealed and provided additional information to Fitch that resulted in a rating action that is different than the original rating committee outcome.
Huh … reading between the lines on this it could have been a worse outcome for Italy?
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Note – S&P recently affirmed Italy at BBB/A-2 with an outlook negative.
And – the ECB will still accept Italy debt as collateral given their recent changes to accept debt which was eligible on April 7th.

Major indices give up earlier gains and close lower on the day

  
Analysis, US Market

Nasdaq under pressure ahead of the Big 5 earnings

As mentioned in prior posts today, Alphabet, Amazon, Facebook, Microsoft and Facebook will all report earnings this week. In advance of those risk events, market traders took profits selling each lower on the day. If you were to add Netflix to the mix (they reported last week), all 6 of those influential stocks fell more than the overall market (Nasdaq was down -1.40% on the day).
Nasdaq under pressure ahead of the Big 5 earnings
The final numbers for the major indices are showing:
  • S&P index fell -15.09 points or -0.52% to 2863.39
  • NASDAQ index fell -122.43 points or -1.4% to 8607.73
  • Dow fell -32.23 points or -0.13% to 24101.55. Dow fell for the 1st time after rising the last 4 days in a row.

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