The dollar is strengthening throughout the market despite the unthinkable increase in the number of applications for unemployment benefits in the US. The dollar index again exceeded the 100-point mark, reflecting increased demand. The focus of traders' attention is still on the news flow regarding the spread of the coronavirus. However, today market participants looked at this problem from a slightly different angle, taking into account the resonant publication of Bloomberg. Although the information released is not official (in fact, it is just unconfirmed rumors), the panic in the financial markets has increased again. The key beneficiary of this situation was the US dollar - concerned investors returned to the greenback, creating a stir around this currency.
US press recently released information that the official Chinese data on the number of infected and died as a result of the coronavirus pandemic are falsified. According to reporters from Bloomberg, this conclusion is contained in a secret report by US intelligence, which was presented to the White House. However, the sources of journalists did not provide any additional information about this report. But at the same time, they clarified that China significantly underestimated the statistics on infected and dead.
It is also worth noting here that a few days before the above publication, the Chinese economic journal Caixin, which is engaged in investigative journalism, also doubted the official statistics. According to their information, funeral homes in Wuhan recently received an unusually large number of funeral urns. Trucks delivered 5,000 ballot boxes to just one of seven funeral homes last week, and there are queues to receive the ashes of loved ones. According to journalists, this may indicate a significantly higher mortality rate as a result of the pandemic. According to some estimates, the actual number of deaths may exceed 40,000, while the official figure is 3.3 thousand deaths.
At first glance, there is no reason to panic, since the alleged statistics concern only China. But, according to experts, the real picture of the development of the epidemic in China is very important for modeling the spread of Covid-19 around the world, as well as for assessing the effectiveness of measures to combat it. If the published information is confirmed, all predictive designs that were modeled earlier will collapse. Let me remind you that the Chinese authorities officially reported 82,000 cases of infection and 3,300 deaths (with a population of 1.3 billion people), while the United States currently identified more than 200,000 infected, of which more than 4,000 died (with a population in 320 million people).
Official Beijing has not yet commented on Bloomberg news. But the situation was answered by a Mosal of China in France: in an interview with BFMTV, he denied the manipulation of statistics. According to him, we are talking about "normal mortality", not related to the coronavirus - he said that the urns with ashes ceased to be issued on January 23, so now that the restrictive measures in this regard have been lifted, queues have appeared in funeral homes.
However, panic in the foreign exchange market began to intensify not only due to the resonant publication of Bloomberg. Today it also became known that an outbreak of Covid-19 was recorded in China again: 1,600 new cases of infection were registered there per day. So far, China has managed to contain the disease, but today the Chinese have officially reported a worsening situation.
Meanwhile, the total number of people infected in the world is approaching the millionth mark. If this morning this indicator was at the level of 930,000, then at the moment it has exceeded the 980,000 mark. Obviously, tomorrow this sad indicator will cross the millionth threshold. This fact may provide additional support to the dollar, which again performs the duties of the main defensive instrument.
Speaking directly about the EUR/USD pair, in the wake of the anti-risk sentiment, the bears were able to overcome the support level of 1.0890 (the lower boundary of the Kumo cloud, which coincides with the Tenkan-sen line on the daily chart), opening the way for an intermediate, psychologically important price barrier of 1,0800. The main support level is the price of 1.0750 (the lower line of the Bollinger Bands indicator on the weekly chart), but for now it is advisable to open short positions to the base of the eighth figure. In the area of the price target of 1.0800, the downward impulse may lose its strength, so you need to be careful with sales. It is also worth noting that if the bears do not enter the eighth figure, the pair is unlikely to remain at such price bottoms - with a high degree of probability correction will follow at least to the boundary of the ninth figure (with a stronger correctional impulse - to today's high, that is, to around 1.0963).
It is also worth noting that the dollar today completely ignored the crushing data on the growth in the number of applications for unemployment benefits. Last week, this release shocked the markets, as it was at a three-million mark. Today it surprised even more: with a forecast of growth of up to 3,500,000, the indicator jumped to six million, again updating the historical record. But a surge of anti-risk sentiment offset a negative reaction regarding this release. If panic does not subside by tomorrow, the US currency will ignore Nonfarms, no matter how bad it will be. In this case, the EUR/USD pair can really end the week on a minor note, that is, in the middle of the seventh figure.
