Archives of “June 8, 2020” day

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NBER says US recession began in February

  
Analysis, Economy
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Business Dating Cycle Committee says contraction ongoing

The US National Bureau of Economic Research says the American economy fell into recession in February to end an expansion that started in June 2009.
It was the longest expansion in US history at 128 months.
In determining the date of the monthly peak, the committee considers a number of indicators of employment and production. The committee normally views the payroll employment measure, which is based on a large survey of employers, as the most reliable comprehensive estimate of employment. This series reached a clear peak in February.
There’s no magic in determining a recession but the NBER generally gets the privilege of making the call in the US.

CAD is overvalued. Buy USD/CAD on dips

  
Analysis, Forex

USD/CAD is down 45 pips to 1.3376 today

USD/CAD is down 45 pips to 1.3376 today

 

‘The CAD was among the best-performing G10 currencies in recent days, supported by robust risk sentiment and resilient commodity prices. Moreover, at its June meeting, the BoC presented a less negative outlook for the Canadian economy while reining in some of its monetary stimulus. The CAD outlook may not remain too rosy for too long, however. Indeed, a planned OPEC meeting to extend the recent production cuts has been delayed due to difficulties enforcing compliance with the output reduction by all member-states,”

“The CAD is starting to look expensive vs the USD. Indeed, both our short-term and long-term fair value models are suggesting that we are now in overvalued territory for the CAD, suggesting that USD/CAD is buy on dips here,”

USDJPY corrects toward lower trend line/swing area

  
Analysis, Forex

Rising 100 hour MA at 109.029.

The USDJPY has corrected toward a lower trend line at 109.157 area. Just below that, a swing high from Thursday and swing lows from Friday at 109.159.  Below that is the rising 100 hour MA at 109.029.  The price has not been below the 100 hour MA since June 2.
Rising 100 hour MA at 109.029.
The price last week moved steadily higher (stocks and yields moved higher helping to support the pair) with an acceleration on Friday above a topside trend line to the high at 109.843.  However, momentum stalled (could not be sustained), and the price action today took the price back below the topside trend line (and has stayed below today).  Now the pair is testing a lower support target.
Do the buyers come in, or does the probe lower continue with a retest of the 100 hour MA.   That is the intraday question now as price trades at lows.

Quiet Monday with ECBs Lagarde testimony the highlight

  
  Analysis

Monday after jobs

The US jobs report surprised on Friday with a gain of +2.5M vs a decline of -7M expected. Focus in the US will be on stock and bond markets. The stocks rose sharply with the Dow industrial average leading the way with a 3.15% gain. The NASDAQ lagged with a 2.06% gain (S&P rose 2.62%) .  US stocks are mixed with the Dow (+249 points) and S&P (+17 points) rising but the NASDAQ lower (-15 points) currently.  Bond yields are higher on Friday and are marginally higher today with the yield curve continue to steepening
There are no economic statistics released today. ECB’s Lagarde will the testifying in the European Parliament hearing.  Last week, Lagarde and the ECB increases emergency bond buying foreign by another  €600 billion. However she could face some questions over the stimulus after the German top court ruled that the ECB abused his power in earlier bond purchases.  The guards testimony is to begin at 9:45 AM ET
The US treasury will auction off 3 year notes at 1 PM ET. With all the stimulus treasury auctions will continue to be more of a focus as the markets adjust to higher borrowing requirements. Yields are moving higher in anticipation

AstraZeneca and Gilead Science to merge?

  
  Analysis
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How likely is deal?

How likely is deal? 
Bloomberg reported that AstraZeneca contacted Gilead last month about a potential $232 bln pharma powerhouse merger. According to Jefferie analysts the merger is unlikely:

While Gilead may look cheap with its price-to-earnings ratio of 12 times and AstraZeneca may be attracted by the potential cost-cutting and decent free cashflow, Jefferies analysts said they do not view a deal as likely. “We think Gilead believes its HIV business is very underappreciated,” they said in a note, adding that the company “would prefer to build value over time and do its own tuck-in deals

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