Morning Market Review

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04/06/2020

EUR/USD

EUR shows a slight increase against USD during today's Asian session, correcting after a downward rally of the instrument last week, which led to the updating of local lows from March 25. The growth of EUR on Monday can be attributed to profit taking by investors, while fundamentally the picture is not changing much. Investors are still buying USD amid the worsening epidemiological situation in the world. Moreover, depressing macroeconomic statistics from the USA, reflecting the global slowdown trend, do not interfere with USD growth. European statistics are also often worse than market expectations. For example, data from Markit published last Friday indicated a decrease in Services PMI in March from 28.4 to 26.4 points. Manufacturing PMI for the same period declined from 31.4 to 29.7 points.

GBP/USD

GBP shows ambiguous dynamics during today's Asian session, consolidating after a surge of "bearish" activity at the end of last week. Investors sold GBP on Friday amid worsening situation with coronavirus in the UK. Markets hope that the country will be able to overcome the peak of the epidemic in the next two weeks, but so far there is little evidence of this. Investors also focused on the March US labor market report on Friday. As expected, the report turned out to be sharply negative, but did not prevent the further strengthening of USD. Nonfarm Payrolls in March collapsed by 701K after rising by 275K in February. The Unemployment Rate jumped sharply from 3.5% to 4.4%, which turned out to be worse than market expectations suggesting an increase to the area of 4%. Labor Force Participation Rate also fell significantly from 63.4% to 62.7% with a forecast of 63.3%. At the same time, Average Hourly Earnings in March increased by 0.4% MoM after rising 0.3% MoM in the previous month.

NZD/USD

NZD is slightly strengthening against USD during today's Asian session, trying to correct after finishing the last trading week with a moderate decrease updating local lows since March 26. NZD remains under pressure amid further deterioration of the epidemiological situation in the world, which is pushing investors to buy USD as a safe haven and a source of liquidity in the market. The March report on the US labor market, published last Friday, only accelerated the decline of the instrument, despite the fact that the data frankly disappointed investors. Insignificant support for NZD is provided only by an improvement in the situation in China, which, having managed to overcome the epidemic, is gradually recovering from quarantine. Today's data from New Zealand remained in the background. Nevertheless, ANZ Commodity Price Index in New Zealand in March decreased by 2.1% MoM, repeating the February dynamics. Analysts expected a decrease of 2.5% MoM.

USD/JPY

USD is rising against JPY during today's Asian session, updating local highs since March 27. The instrument adds about 0.5% and is trying to consolidate above 109.00. USD still wins noticeably in the race of safe haven currencies in the market, despite the publication of depressing macroeconomic statistics from the US. In particular, the March report on the US labor market published last Friday turned out to be worse than analysts' expectations, which, however, only increased demand for USD. Meanwhile, Japanese data reflected a decrease in Services PMI from Jibun Bank in March from 46.8 to 33.8 points with a forecast of a fall to 32.7 points.

XAU/USD

Gold prices demonstrate flat dynamics of trading during today's Asian session, consolidating near the local highs since March 30, updated at the end of last week. Gold is showing moderate growth amid strengthening USD, which still serves as a source of liquidity in the market. The March report on the US labor market, published last Friday, despite an overt negative, increased interest of investors in USD, as they are worried about the prospects for the near future.

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