Canadian and US Dollars are both trading as the weakest ones today, after release of job data. US initial claims stood over 6m level for the second week while Canada lost more than 1m jobs in March. Meanwhile, Australian Dollar is trading as the strongest one, following higher stock markets, followed by Sterling. There are two events risk that could trigger more volatility ahead of the long weekend, including OPEC++ decision on production cut, as well as EU decisions on coronavirus rescue.

Technically, Gold’s rally today suggests that large rise fro m1451.16 is resuming. Next target is 61.8% projection of 1451.16 to 1644.67 from 1567.78 at 1687.36. As such rise is seen as the second leg of consolidation from 1703.28, we’d expect strong resistance around 1687.36 to limit upside to bring near term reversal. However, decisive break of 1703.28 will resume larger up trend. That would also be a signal of more downside pressure in Dollar.

In Europe, currently, FTSE is up 1.71%. DAX is up 0.87%, CAC is up 0.49%. German 10-year yield is down -0.0025 at -0.330. Earlier in Asia, Nikkei dropped -0.04%. Hong Kong HSI rose 1.38%. China Shanghai SSE rose 0.37%. Singapore Strait Times rose 1.26%. Japan 10-year JGB yield dropped -0.0003 to 0.017.

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US initial jobless claims dropped to 6.6m, continuing claims more than doubled to 7.46m

US initial jobless claims dropped -261k to 6,606k in the week ending April 4. Four-week moving average of initial claims rose 1,599k to 4,266k. Continuing claims rose 4,396k to 7,455k in the week ending March 289, highest on record. Four-week moving average of continuing claims rose 1,439k to 3,500k.

PPI came in at -0.2% mom, 0.7% yoy in March. Core PPI was at 0.2% mom, 1.7% yoy.

Canada lost one million jobs, unemployment rate jumped to 7.8%

Canada employment contracted -1011k in March, or -5.3%. Employment rate dropped 3.3% to 58.5%, lowest since April 1997. The contraction in employment was also larger than any of the three significant recessions since 1980. Unemployment rate surged from 5.6% to 7.8%. The 2.2% rise was the largest one-month increase since comparable data became available in 1976.

ECB Minutes: Unanimous agreement on bold and decisive actions to counter coronavirus risks

Accounts of the ECB meetings in March (11-12, 18), noted “there was unanimous agreement that bold and decisive action was needed to counter the serious risks posed by the rapidly spreading coronavirus for the monetary policy transmission mechanism.”

“Reservations were expressed by some members about the necessity of launching a new, dedicated asset purchase programme.” However, “notwithstanding the hesitation, readiness was also expressed to go along with the carefully phrased communication, in the light of the scale of the market disruptions and challenges faced in the pursuit of the ECB’s mandate.”

ECB Lagarde urges Europe not to get fixated with coronabonds

ECB President Christine Lagarde told French daily Le Parisien that EU leaders should not “get fixated on coronabonds”. There could be other forms of solidarity between European countries in figure the coronavirus crisis. Members could have joint spending from a shared budget. Or there could be a reconstruction fund to finance investments after the crisis.

Lagarde also told Italy’s Il Sole 24 Ore that European governments have to support each other to country the coronavirus shocks. Fiscal and monetary policies nee to be aligned. And, “if not all countries are taken care of, the others will also suffer… solidarity is in the interest of all.”

EU finance minister to reconvene meeting on coronavirus rescue

EU finance ministers failed to agree on the coronavirus rescue package earlier this week after a 16-hour video conference meeting. The meeting is due to reconvene at 1500GMT today.

Ahead of that, German Economy Minister Peter Altmaier said, “it’s important that we take this decision today on the 500 billion euros that is in discussion — that’s an incredibly large sum of money that we could use to help a lot of people, especially in the hardest hit countries, Spain and Italy.”

“I have confidence that (German Finance Minister) Olaf Scholz, together with his colleague (French Finance Minister) Bruno Le Maire, can push this forward today and we are all working on that together,” he added.

UK GDP dropped -0.1% in February, no growth before coronavirus outbreak

UK GDP contracted -0.1% mom in February, below expectation of 0.1% mom. Index of services rose 0.0% mom. Index of production rose 0.1% mom. Manufacturing rose 0.5% mom. Construction dropped -1.7% mom. Agriculture dropped -0.1% mom.

For the three months to February, GDP grew just 0.1% 3mo3m. Index of services rose 0.2% 3mo3m, the only positive contribution to GDP growth, by 0.15%. Index of production dropped -0.6% 3mo3m, contributed to -0.08% GDP growth. Construction dropped -0.2% 3mo3m, contributed to -0.01% GDP growth.

Rob Kent-Smith, Head of GDP, Office for National Statistics: “Today’s figures show that in the three months to February, which was before the full effects of Coronavirus took hold, the economy continued to show little to no growth. Most elements of the services sector grew, though manufacturing continued to decline. Construction saw a notable fall in February, as wet weather and flooding hampered housebuilding. The underlying trade balance moved into surplus in the latest 3-months, the first seen since comparable records began over 20 years ago. This surplus was caused by a large fall in goods imported from EU countries.”

Also from the UK, industrial production came in at 0.1% mom, -2.8% yoy in February, versus expectation of 0.3% mom, -2.8% yoy. manufacturing production came in at 0.5% mom, -3.9% yoy, versus expectation of 0.3% mom, -3.9% yoy. Goods trade deficit widened sharply to GBP-11.5B, versus expectation of GBP -6.0B.

BoJ Kuroda: Economic outlook is extremely uncertain

BoJ Governor Haruhiko Kuroda said in the regional branch manager meeting that “the spread of the coronavirus is having a severe impact on Japan’s economy through declines in exports, output, demand from overseas tourists and private consumption.” And, “the economic outlook is extremely uncertain.”

“For the time being, we won’t hesitate to take additional monetary easing steps if needed, with a close eye on developments regarding the coronavirus outbreak,” he added.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.0822; (P) 1.0862; (R1) 1.0894; More

No change in EUR/USD’s outlook for now. Further rise is mildly in favor as rise from 1.0768 is seen as the third leg of the corrective pattern from 1.0635. Intraday bias stays on the upside for 61.8% retracement of 1.1496 to 1.0635 at 1.1167. On the downside, break of 1.0768 will resume the fall to retest 1.0635 low instead.

In the bigger picture, as long as 1.1496 resistance holds, whole down trend from 1.2555 (2018 high) should still be in progress. Next target is 1.0339 (2017 low). However, sustained break of 1.1496 will argue that such down trend has completed. Rise from 1.0635 could then be seen as the third leg of the pattern from 1.0339. In this case, outlook will be turned bullish for retesting 1.2555.

Economic Indicators Update

GMT Ccy Events Actual Forecast Previous Revised
23:01 GBP RICS Housing Price Balance Mar 11% 14% 29%
06:00 GBP GDP M/M Feb -0.10% 0.10% 0.00% 0.10%
06:00 GBP Index of Services 3M/3M Feb 0.20% 0.30% 0.00%
06:00 GBP Industrial Production M/M Feb 0.10% 0.30% -0.10% 0.20%
06:00 GBP Industrial Production Y/Y Feb -2.80% -2.80% -2.90% -2.80%
06:00 GBP Manufacturing Production M/M Feb 0.50% 0.30% 0.20% 0.40%
06:00 GBP Manufacturing Production Y/Y Feb -3.90% -3.90% -3.60% -3.70%
06:00 GBP Goods Trade Balance (GBP) Feb -11.5B -6.0B -3.7B -5.8B
08:00 EUR Italy Industrial Output M/M Feb -1.20% 3.70% 3.60%
11:30 EUR ECB Monetary Policy Meeting Accounts
12:00 GBP NIESR GDP Estimate Mar 0.20%
12:30 USD PPI M/M Mar -0.20% -0.30% -0.60%
12:30 USD PPI Y/Y Mar 0.70% 1.80% 1.30%
12:30 USD PPI Core M/M Mar 0.20% 0.00% -0.30%
12:30 USD PPI Core Y/Y Mar 1.40% 1.70% 1.40%
12:30 USD Initial Jobless Claims (Apr 3) 6606K 6 648K
12:30 CAD Net Change in Employment Mar -1010.7 K 30.3K
12:30 CAD Unemployment Rate Mar 7.80% 5.60%
14:00 USD Michigan Consumer Sentiment Index Apr P 75 89.1
14:00 USD Wholesale Inventories Feb F -0.20% -0.50%
14:30 USD Natural Gas Storage 23B -19B


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