ATFX Market Update - 2020.02.28

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ATFX Market Outlook, 2020 Feb 28

Personal opinions today:

Investors worried about the global economy and investment climate due to the global coronavirus spreads. The price of crude oil fell for a week, dropping as much as $46. In addition, since the beginning of the week, the Dow futures fell near 3,200 points, the largest weekly decline since the trade war between China and the United States in 2018. In addition, the British prime minister said that the British government and the European Union will negotiate a tough deal to leave the European Union next week, and will not compromise with the terms of the deal proposed by the European Union, and will strive for the best interests of Britain. These risk factors, lead the market risk on, global stock markets fell, gold and the yen as a safe-haven asset, gold prices, and the yen rose. British pound broke 1.29 support against the dollar.

Fed officials say U.S. interest rates are at the appropriate level and the spread of the coronavirus has not affected the U.S. economy yet. Fed has no intention of cutting rates but will keep a close eye on economic growth. So investors are focused on all the economic data for February. Markets will be watching the Chicago PMI and the Michigan consumer confidence index for February tonight.

[Important financial data and events]
Note: * refers to the degree of importance

07:30 Japan unemployment rate in January **
15:00 UK Nationwide house price index for February *
15:30 Swiss actual retail sales in January ***
15:45 France CPI and Q4 GDP **
16:55 German unemployment rate and employed change ***
21:00 Germany February CPI preliminary rate ***
21:30 Canada GDP in December ***
21:30 U.S. core PCE price index for January ***
22:45 U.S. Chicago PMI in February*
23:00 U.S. Michigan consumer confidence index final ***

EURUSD
1.1020/1.1030 resistance
1.0965/1.0955 support
The Euro rose against the dollar as the dollar fell on market sentiment that the Fed could cut rates this year, possibly as soon as April. Separately, the Euro rose to the 1.10 level against the dollar last night as economic sentiment and consumer sentiment in the Eurozone rose in February and expectations of an early increase in German consumer sentiment rose in February. In the European trading section today, German job data and CPI will be the market focus. If the data is stronger than expected, the Euro could test 1.1020 or 1.1030 resistance against the dollar. Technically, 1.1030 is an important resistance level for short-term gains, worth noting!

British Pound to the dollar
1.2955/1.2965 resistance
1.2855/1.2845 support
Next Monday, the British government will formally discuss a deal with the European Union's Brexit committee, betting its future on Brexit negotiations as the prime minister plays hardline and threatens not to worry about the risk of a no deals on Brexit. Investors were nervous, of course, and the pound fell. Meanwhile, as the new chancellor of the exchequer prepares to unveil Britain's fiscal framework, markets are waiting to see if the budget is likely to boost government spending and stimulate the economy as expected. In the short term, the pound is expected to continue to trade within 1.28 to 1.30 in anticipation of good news.

Australian dollar
0.6590/0.6600 resistance
0.6515/0.6505 support
U.S. economic data is weak, investors expect the federal reserve to cut interest rates this year, the dollar fell, indirect short-term gains in the Australian and New Zealand dollars. But the RBA has mentioned cutting rates, it will continue to be bearish on the Australian dollar.

Dollar to yen
109.70/109.80 resistance
109.15/109.05 support
The recent global economic performance is weak, the global stock market falls, some hedging funds flows into the yen. This analysis mentioned earlier that with the approaching of Japan's fiscal year settlement, enterprises transfer back some capital to Japan, and the demand for yen increases. Believe that the dollar will fall against the yen. As of last night, the dollar had reached 109 against the yen, before potentially testing 108. Technically, pay initial attention to 109.05 support. If global stock markets continue to fall and U.S. economic data is weak tonight. These factors could allow the dollar to break through support against the yen and test the 108 level.

USDCAD
1.3445/1.3455 resistance
1.3360/1.3350 support
U.S. crude oil futures continued to fall as the global economy weakened, pushing the U.S. dollar above 1.34 to the Canadian dollar. OPEC and different countries’ energy ministers meeting next week are expected to announce early production cuts to stabilize crude prices. The Canadian dollar is expected to rise if crude oil prices rebound. Also, Canada releases the GDP in December data tonight, which could make short-term volatility to USDCAD.

US crude oil futures
47.30/47.65 resistance
45.85/45.55 support
The coronavirus spreads to different countries, the global economic outlook is pessimistic, crude oil demand decline, negative oil prices. Next week, OPEC is expected to meet with different countries’ energy ministers to speed up the announcement of a joint production cut and stabilize crude prices. Yesterday, OPEC suggests raised the cut from 600,000 b/d to 1m b/d. If the possibility of reduction increases, the reduction is as large as the new target level. Crude oil prices are expected to move above the $52 target.

Gold
1656/1658 resistance
1638/1636 support
As the coronavirus spread, global stock markets fell and some safe-haven money moved into the gold market for a hedge, supporting the gold price at the $1,630 level. If the risk aversion picks up, the gold price could still test at $1,660. Technically, short-term significant support is around $1,635 and resistance is around $1,653. If gold breaks $1,660, it could still test $1,685 or close to $1,692. Gold is above $1,685, so watch out for a drop.

U.S. Dow Jones industrial average futures US30
26395/26515 resistance
25120/24990 support
Dow futures fell again amid uncertainty about the global economy. Weekly decline tired nearly 3200 points. Technically, Dow futures absorb 50% of the overall gain for 2019, with 25,540 support. For now, it's important to keep an eye on the coronavirus spreads and more on what the U.S. President, federal reserve officials say and tonight's U.S. economic data could do to lift stocks.

BTCUSD:
9085 / 9245 resistance
8455 / 8250 support Unexpected market demand declined in cryptocurrencies, the bitcoin price fell sharply after investors worry about the coronavirus spread. Most of the cryptocurrency's price fell and transfer to the traditional hedge market. Technically, the important support at $8250. If it fails to support, the price would test $7000 or $6500.

Enjoy trading! The content is for reference only. Please do ensure that you understand the risk.

Registered Australian Accountant/ Certified Professional Manager / Certified Financial Advisor Experienced Investor / Media Market Commentator Martin Lam has Over 17 years’ experience in global investment market. Familiar with the worldwide stock indices, precious metals such Gold and Silver, Crude oil and Forex. He operated Martin Currency Trading Company and had partnership with a number of well-known international financial corporations and institutions. Before he join ATFX, he was TeleTrade Greater China development and Sales Director. Mr. Lam attends Hong Kong Now TV and China CCTV finance channel once a week. He also had regularly invited by different media, such as DBC Digital Financial Channel, Hong Kong Economic Times, The Standard, Ming Pao to share his experience to trade in Forex, Precious metals, Crude oil and worldwide stock indices

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