The coronavirus suddenly became the main driving force in the market again, and despite all the published macroeconomic data, the main movement began during Boris Johnson's speech. He only spoke about the coronavirus. More precisely, speaking in the House of Commons, the prime minister announced a new stage in lifting the restrictive measures previously introduced due to the coronavirus epidemic. It consists of the opening of pubs, cinemas and museums, and this will happen on July 4. Also, Johnson announced the reduction of social distance from two meters to one. But all this was not enough for the prime minister, and he said that the further lifting of restrictive measures would go faster than planned. After such statements, investors were no longer interested in what was happening there with macroeconomic statistics. They just played against the dollar. Indeed, complete confusion continues on the issue of restrictive measures in the United States. Somewhere they are being cut, extended, and there is simply no single policy on this issue. Moreover, in fact, the self-isolation regime is no longer respected. Let's just say that, after mass unrest, this has lost all meaning, and no one is following this. It came to the point that the European Union is considering the possibility, after opening all borders, to temporarily ban entry for citizens of the United States. And of course, everyone draws a parallel between the removal of restrictions and the beginning of economic recovery. There is no need to talk about any growth without this. That is, it turns out that the British economy will begin to grow earlier than the American one.
At the same time, preliminary indexes of business activity in the UK were not just better than forecasts. After all, the index of business activity in the manufacturing sector increased from 40.7 to 50.1. That is, it exceeded the mark of 50.0 points, separating the decline from growth. Simply put, there are signs of the beginning of economic recovery. The index of business activity in the service sector grew from 29.0 to 47.0. As a result, the composite business activity index grew from 30.0 to 47.6. So macroeconomic statistics in the UK are quite good, and inspire optimism.
Manufacturing Business Activity Index (UK):
At the same time, US data turned out to be significantly better than forecasts. Thus, the index of business activity in the service sector grew from 37.5 to 46.7, while the production index from 39.8 to 49.6. The composite business activity index has grown from 37.0 to 46.8. Preliminary data on business activity indexes was published in the United States yesterday. Sales of new homes unexpectedly increased by 16.6%. Total sales increased from 580,000 to 676,000. But all this was published after Johnson's speech, so that investors no longer cared for them.
New Home Sales (United States):
The macroeconomic calendar is completely empty today, and investors are unlikely to be interested in housing prices in the United States, which should fall by 0.4%. This is an insignificant factor after yesterday's data on sales of new homes. No speeches are planned for today. So market participants will be guided solely by technical factors.
Home Price Index (United States):
In terms of technical analysis, speculative excitement is recorded, which excites the interest of market participants on a daily basis. So, analyzing the details of the fluctuations, you can see the corrective move from the level of 1.2350, which brought the quote to the value of 1.2500, where it might seem that resistance was found for a moment, but no, speculators continued to work, which led to a local consolidation above a variable level.
Regarding volatility, high indicators are still recorded here, which practically exceed the average daily value.
Considering the trading chart in general terms, the daily period, it is worth noting that the downward cycle of June 11 brought the quote to the previous range of 1.2150 // 1.2350 // 1.2620, inside which all fluctuations occur.
It can be assumed that having an accumulation in the region of 1.2500/1.2540 will serve as a catalyst for trading forces for speculators, where, in terms of the logic of technical analysis, a recovery in the direction of 1.2450 could occur, but due to the high excitement, the best strategy is still the method of working on the breakout of established boundaries.
Specifying all of the above into trading signals:
- We consider long positions higher than 1.2545, towards 1.2580.
- We consider short positions lower than 1.2490, towards 1.2450.
From the point of view of a comprehensive indicator analysis, you can see that the indicators of technical tools on hourly periods signal a purchase, due to prices being focused above the level of 1.2500. The daily period still signals a sale, as it is in a downward bar on June 11th.
