ECB surprise, NFP, OPEC + expectations and German 130 bln

The main event of yesterday was the ECB's decision to expand the quantitative easing program by another 600 billion euros (analysts expected an increase of 500 billion euros). As a result, the size of the program has inflated to 1.35 trillion euros. This, of course, is a lot, so the growth of the euro against this background is generally explainable. Moreover, the expectations of an early recovery of the Eurozone economies are becoming more and more rosy. And even a decline in retail sales in the Eurozone by almost 12% by the end of April could not cool the optimists' hot heads. Especially when you consider the fact that the German Government approved a program of assistance to the country's economy in the amount of 130 billion euros.

The Fear Index, meanwhile, broke through a new local bottom. Which only confirms how much everyone is focused on a bright future. At the same time, almost 2 million people in the United States applied for unemployment benefits. As a result, the total number of people receiving unemployment payments rose to 21.5 million. Just in case, we note that at the peak of the global financial crisis this number only slightly exceeded 6 million. This is about optimism and reality.

The fact that markets do not want to see the negative does not make it less obvious and even more so it does not disappear from it. It is entirely possible that markets will receive another reason to return to reality today upon the publication of official statistics on the US labor market. Unemployment is expected at around 20%, and the NFP at -8 million. After the ADP figures on Wednesday (-2.7 million), the markets are clearly set for a positive surprise, but it may well not be, and we will see in fact -10 million +/-. This can be a strong blow to market optimism with all the ensuing consequences: stock market sales, the rise in the dollar and gold, the strengthening of the Japanese yen, the decline in oil, etc.

Speaking of oil, yesterday’s OPEC + meeting didn’t take place, as a number of countries that broke the deal, in particular Iraq, did not give the rest the opportunity to agree on new conditions. According to current information, the meeting was postponed to Saturday. So far, markets are expending for another 1 month of current volumes of contraction. In general, we continue to believe that profit taking on long positions in oil is the best option for oil trading strategy today.