You can convince yourself as much as you like that we live in a certain digital era and post-industrial society, but reality hurts over and over again and everyone from heaven returns to sinful earth. In fact, we live in the oil era, and all these wonderful technologies and other miracles without energy suddenly stop working. And the main source of this very energy is oil. And strangely enough, even the dollar depends on the cost of oil. However, they have an inverse correlation, which manifests itself only in moments of sharp and strong fluctuations in black gold prices. And that is exactly what we saw yesterday. Although on Mondays, some excitement in the market is a bad idea. People should be given time to at least leave the weekend. However, in the face of constant accusations of all wrongdoings, China is not in a good place, so it made a statement that the volume of oil consumption has almost returned to those levels that were before the coronavirus epidemic. That is, demand is starting to recover. In addition, the Arabs, too, have long been working, as they left the weekend earlier. Like it or not, the days off are Thursday and Friday in Arab countries. So Monday for them is already the middle of the work week. So to speak, it’s time for labor exploits. Well, the Saudis decided once again to declare that they continue to adhere to the plan to gradually reduce oil production. In other words, demand is growing, and supply is declining. As a result, oil, which had already been growing for several days in a row, suddenly issued an impressive jump up. Here, even the dollar could not resist and was forced to give up their positions. Therefore, the price declined in relation to all currencies of the world.
At the same time, the dollar continues to lose its position, although oil has already gone for a technical correction, and European statistics can please only those who are not friends with logic. For example, the number of applications for unemployment benefits increased to 856.5 thousand in the UK. And this is not just a new historical high. This is a maximum with a capital letter. Indeed, the previous maximum value was established in February 2009, and then it amounted to 142.8 thousand. After all, the previous maximum value was set in February 2009, and it was then 142.8 thousand. That is, the previous record was exceeded almost six times. But, in a strange way, market participants only look at the unemployment rate, which has fallen from 4.0% to 3.9%. And this seems paradoxical. But the thing is that the data on applications is for April, then here is the unemployment rate for March. And as you know, restrictive measures due to the coronavirus epidemic in the United Kingdom were only introduced towards the end of March. In other words, unemployment data does not reflect reality. Moreover, this issue was not without a slight embarrassment, since a month ago, when the UK reported a rather low increase in the number of applications for unemployment benefits, it suddenly became clear that employment centers and other social services were closed along with the introduction of quarantine measures. In other words, even March statistics are incomplete. And what can I say, because people simply had nowhere to turn in the event of losing their jobs. And the fact that market participants refuse to see these facts suggests either that they have all lost their minds or that the global weakening of the dollar is still continuing.
Change in the number of applications for unemployment benefits (UK):
Moreover, the statistics in the euro area is no better. Registration of new cars in annual terms declined by 76.3%. This, of course, is slightly better than the forecasts that said that their number should have declined by 96.0%. But still, this is not easier. In addition, construction data will still be published, the volume of which may decrease by 17.0%. So the situation is really sad. Nevertheless, the upcoming summit of the heads of state of the European Union gives everyone optimism. The fact is that Germany supported the plan of France to support the European economy in the amount of 500 billion euros. Of course, the consent of other countries is still necessary, with which difficulties may arise. For example, Austria rests. The position of the Netherlands is also rather negative. But the fact itself that the two largest countries in the euro area have come to some kind of compromise on the issue of saving the European economy, says a lot. So the growth of the single European currency, in fact, does not cause any special problems.
Scope of construction (Europe):
Although all these situations are local, and just a good combination of circumstances combined over time, the overall situation in the world economy has not changed in any way. And the idea is that the dollar is bound to recover. However, apparently, this will have to wait today. After all, US statistics are expected to be very, very disappointing. So, the number of new construction projects may be lowered by 30.1%. The number of issued building permits should decline by 28.9%. It turns out that the volume of construction will continue to decline.
New Home Construction (United States):
The euro/dollar currency pair managed to rebound the support level of 1.0775 once again, during which the quote resumed movement within the framework of the main flat formation 1.0775 // 1.0850 // 1.1000. It can be assumed that the existing inertial course will soon slow down the movement, where the points of possible resistance are at 1.0965 and 1.1000.
The pound/dollar currency pair reversed, having a price rebound from the point of variable support by more than 180 points. It can be assumed that the existing inertial course carries a local character that will not violate the sequential downward development. The resistance points that may put pressure on market participants are in the region of 1.2250 and 1.2350.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.