Action Insight Mid-Day Report 3-6-20

Dollar Ignores Strong Non-Farm Payrolls, Soldoff on Aggressive Fed Cut Pricing

Action Insight Mid-Day Report 3-6-20 Dollar Ignores Strong Non-Farm Payrolls, Soldoff on Aggressive Fed Cut Pricing Both US and Canadian Dollar continue to be the weakest one for today despite stronger than expected job data. In particular, markets are aggressively pricing in another deep rate cut by Fed on March 18, as Wuhan coronavirus pandemic worsens. At certain point today, fed fund futures were pricing in more than 80% change of -75bps Fed cut to 0.25-0.50%. After non-farm payroll report, such aggressive pricing recedes mildly. But futures are still implying 55% odd of another -50bps cut. Technically, EUR/USD's strong break of 1.1239 resistance is the biggest development today. It should confirm medium term bottoming at 1.0777. Further rally should be seen to 1.1456 fibonacci level next. Rejections from there would reveal whether EUR/USD is in corrective rise, or in bullish medium term reversal. Global stocks also tumble broadly with major European indices trading down more than -3% at the time of writing. FTSE is down -3.27%. DAX is down -3.37%. CAC is down -3.84%. German 10-year yield is down -0.034 at -0.720. Earlier in Asia, Nikkei dropped -2.72%. Hong Kong HSI dropped -2.32%. China Shanghai SSE dropped -1.21%. Singapore Strait Times dropped -1.90%. Japan 10-year JGB yield dropped -0.349 to -0.146. Gold hits new 7-year high but cannot push through 1700 handle yet. Both US 10-year yield and 30-year yield hit new record lows. Global coronavirus cases, including China, surged past 100k to 100598, with 3410 deaths. Here are some stats: South Korea (6593 cases, 42 deaths), Iran (4646 cases, 124 deaths), Italy (3858 cases, 148 deaths), Germany (578 cases), France (577 cases, 9 deaths), Spain (382 cases, 5 deaths), Japan (381 cases, 6 deaths), USA (233 cases, 14 deaths), Swiss (185 cases, 1 death), Singapore (130 cases), Netherlands (128 cases, 1 death), UK (116 cases, 1 death), Belgium (109 cases), Norway (108 cases), Hong Kong (105 cases, 2 deaths), Sweden (101 cases). Situation in Europe remain very worrying. Full Report Here Canada employment grew 30.3k, unemployment rated edged up to 5.6% US non-farm payroll grew 273k, wage growth matched expectations Dollar breaks key support as markets corner Fed into another 75bps... EU Hogan hopeful of a mini trade deal with US in... German factory orders rose 5.5%, strongest since 2014 ADB: World to lose 0.4% GDP in worse case scenario of... Top Movers | HeatMap | Pivot Points | Pivot Meters | Action Bias | Vol Fed's Emergency Cut Reveals the Lack of Tools to Deal with... RBA Cut Rate to 0.5%, Being the First Central Bank to... China's PMIs Dived in February, Just First Glimpse of the Disastrous... Central Bank Views | China Watch | Oil N' Gold | Special Topics EUR/USD Mid-Day Outlook Daily Pivots: (S1) 1.1160; (P) 1.1202; (R1) 1.1285; More... EUR/USD surges to as high as 1.1340 so far today. The strong break of 1.1239 resistance confirms medium term bottoming at 1.0777. Intraday bias stays on the upside for 1.1456 fibonacci level next. Reactions from there would reveal if there is medium term bullish reversal. On the downside, though, break of 1.1095 minor support is needed to indicate short term topping. Otherwise, near term outlook will remain bullish in case of recovery. Full Report Here EURUSD | USDJPY | GBPUSD | USDCHF | AUDUSD | USDCAD EURJPY | EURGBP | EURCHF | EURAUD | GBPJPY Recommended Readings Canada: February Delivered More Hiring, But Too Early To See COVID-19 Impact Virus Concerns Overshadow Strong Canadian Labour Market Data Solid US Payrolls Unlikely to Calm Markets If The US Dollar's Going To Bounce, It Better Do It Here GBPJPY Bearish In Short And Medium-Term, Next Support Near 135.80 EURAUD Turns Outlook To Strongly Bullish In Long Term Equities Dive, Again. Gold Up. WTI Under Pressure As Russia Decides Fundamental Analysis | Technical Analysis In-depth Reports FOMC to Make Three 0.25% Cuts by June Bank of Canada Delivers A (Double) Coronavirus Cut Fed Monitor: We Expect Easing of a Further 50bp During the Spring RBA Cut Rate to 0.5%, Being the First Central Bank to Ease Due to Coronavirus Update on COVID-19 Impacts on the Economic Outlook China's PMIs Dived in February, Just First Glimpse of the Disastrous Impact of Coronavirus Outbreak Update on Coronavirus and Global Central Bank Outlook Change Of OCR Call: RBNZ To Cut 25Bp In March Economic Calendar GMT Ccy Events Actual Forecast Previous Revised 21:30 AUD AiG Performance of Services Index Feb 47 47.4 23:30 JPY Labor Cash Earnings Y/Y Jan 1.50% 0.20% 0.00% -0.20% 23:30 JPY Overall Household Spending Y/Y Jan -3.90% -4.00% -4.80% 00:30 AUD Retail Sales M/M Jan -0.30% 0.00% -0.50% 05:00 JPY Leading Economic Index Jan P 90.3 91.9 91.6 07:00 EUR Germany Factory Orders M/M Jan 5.50% 1.50% -2.10% 07:45 EUR France Trade Balance (EUR) Jan -5.9B -4.9B -4.1B -3.7B 08:00 CHF Foreign Currency Reserves (CHF) Feb 769B 764B 09:00 EUR Italy Retail Sales M/M Jan 0.00% 0.30% 0.50% 09:00 Italy Retail Sales n.s.a Y/Y Jan 1.40% 0.90% 0.80% 13:30 USD Nonfarm Payrolls Feb 273K 178K 225K 273K 13:30 USD Unemployment Rate Feb 3.50% 3.60% 3.60% 13:30 USD Average Hourly Earnings M/M Feb 0.30% 0.30% 0.20% 13:30 USD Trade Balance (USD) Jan -45.3B -48.8B -48.9B -48.6B 13:30 CAD Net Change in Employment Feb 30.3K 10.5K 34.5K 13:30 CAD Unemployment Rate Feb 5.60% 5.60% 5.50% 13:30 CAD International Merchandise Trade (CAD) Jan -1.47B -0.83B -0.4B -0.7B 15:00 USD Wholesale Inventories Jan F -0.20% -0.20% 15:00 CAD Ivey PMI Feb 55.2 57.3

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