Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Weak Economic Data Worsened Market Sentiment

By FxPro Financial Services Ltd (Alexander Kuptsikevich)Market OverviewApr 16, 2020 05:17AM ET
www.investing.com/analysis/weak-economic-data-worsened-market-sentiment-200521783/
Weak Economic Data Worsened Market Sentiment
By FxPro Financial Services Ltd (Alexander Kuptsikevich)   |  Apr 16, 2020 05:17AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

World stock indices showed on Wednesday that they could not hold the peaks near monthly highs. The published macroeconomic data does not allow investors to return to purchases despite the large-scale stimulus and expectations of upcoming easing of restrictive measures.

Market sentiment has worsened by the data on the amounts the largest US banks are saving to cover possible losses, as well as new reports of possible bankruptcies of large companies. Weak oil producers (FTS, earlier Whiting) and retailers (JC Penney (NYSE:JCP)) are in the process of insolvency. However, they were not performing well even before all these events. This situation acts as a catalyst to these destructive processes. You may treat this process as a natural cleanup of the market field as long as it did not touch relatively healthy companies.

We can see the same on a country level. The International Monetary Fund reported that about 100 countries have applied to it for help with financing or requesting deferral of debt repayment. The wave of defaults at the level of states is dangerous because it will attract both changes in attitudes to other “weak” countries, and revision of the ratings of companies in these countries, increasing pressure on the financial markets.

Currency markets often mirror these hidden processes, and here it is worth noting the alarm signals.

AUDUSD turned down after the rebound
AUDUSD turned down after the rebound


The Australian dollar and the Chinese yuan turned to decline on Wednesday, and this process continues on Thursday morning. The AUD/USD dropped from 0.6700 to 0.5500 in March but recovered to 0.6440 by Wednesday. The Chinese yuan stopped its growth at 7.04 per dollar. In both cases, the currencies attracted bears, when they offset the decline, which was abnormal in the second decade of March.

This may be a signal from Asian investors that they are not ready to believe that the situation has turned to improvement, forecasting that economic activity won’t recover quickly.

The model for the markets can be the situation of 2008/09, when the rebound after a significant decline ended in a new wave of decreasing. In AUDUSD it was a return to the same levels, while the stock market was updating its lows.

EURUSD desperatelly fighting for 1.1000
EURUSD desperatelly fighting for 1.1000


In the EUR/USD, the level of 1.1000 was an essential battlefront for the bulls and bears. The recovery in the first half of the month stalled on the way to this psychologically important level. It may be an important watershed in the market sentiment. The increase in sales reflects investors’ caution, and the ability to stay above this level and growth above the 200 SMA (now passing through 1.1050) might act as a turning point. But we have not passed this point yet.

The FxPro Analyst Team

Weak Economic Data Worsened Market Sentiment
 

Related Articles

Jeffrey Halley
North Asia Catches A Friday Flu By Jeffrey Halley - Jul 30, 2021

North Asian equity heavyweights have deviated from the price action on Wall Street overnight, heading directly South this morning. Mainland China, Hong Kong, Japan and South Korean...

Weak Economic Data Worsened Market Sentiment

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email