It seems that the world economy is now analyzing losses and is very cautious about the future. Because of the hasty opening of free movement and the launch of production, the chance of a second wave of the epidemic is very high. Coronavirus infections have started again in Wuhan, and this after such serious quarantine measures.
Meanwhile, in the United States, Donald Trump is starting to promote his campaign. There are attempts to put pressure on the Fed to reduce interest rates in the negative zone. Such actions threaten government treasury bonds, which have always been a reliable source of income for large investors. In all circumstances, they have always been profitable. So far, the markets have not understood how to evaluate these statements. The S&P500 is not growing, and is trading down near the 2900 level. DAX closed almost at the opening level, losing 5 hundredths of a percent.
Today the data on GDP in the UK is released and of course it will affect the pound rate. The forecast is clear that the GDP will fall. The UK is going to extend payments of 80% of wages to people receiving up to 2500 pounds per month until October. It’s going to cost the country £14 billion a month. That’s not a small amount during the crisis. Unemployment is rising in the country, and at the same time, union discontent. It is already clear that it will be long and difficult for the whole country to get out of the peak. GBP has once again come to the lower border of the trade range 1.2250-1.2600, which has been in place since late March. So far, there’s no reason for growth. If the GDP comes out better than expected, we might see the GBP/USD pair growing briefly, but it is unlikely to go further than 1.26.
Gold stays in the range of $1700 per ounce. On Tuesday, purchases of the precious metal increased slightly due to Donald Trump’s pressure on the Fed and the announcement to limit investment in the Chinese economy. Breaking through the resistance level at 1720 requires good news impulse.
Just like we wrote at the end of last week, that’s what happened with bitcoin. The large “whales” in the market made a powerful sale as soon as the price for bitcoin reached $10000. The wave of sales was so strong that it lowered the price by more than 20%. Those who have been watching the market move for a long time were already ready, as the patterns of bitcoin growth and decline are often repeated. Halving has taken place. Bitcoin partially recovered on Tuesday and was trading at $8,800. Next, there will be attempts to take the level of $10000 once again, but for this we need another good news.
What’s waiting for us today?
04.00 Decision on interest rate in New Zealand.
08.00 UK GDP
14.30 US producer price index for April
16.30 US crude oil reserves
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