ATFX Market Update - 2020.03.03

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ATFX Market Outlook, 2020 Mar 3

Personal opinions today:

The spread of the coronavirus is likely to ease and G10’s Central Banks are aggressively stimulating their economies to slow down. Fed Chairman Powell said the Fed would take appropriate measures to address downside risks to the economy, and investors expect the Fed to cut interest rates by half a percentage basic point this year to 1.25% from the current 1.75%. Futures on the U.S. Dow Jones index rebounded strongly on expectations the federal reserve will cut interest rates sharply and that production in China will resume. Dow futures rebounded 1,300 points to 26,700. Dow futures rebounded and risk aversion cooled. As the dollar fell, gold fell from $1,611 to as low as $1,584. Separately, crude oil futures rebounded to $48. Investors expect after OPEC production cut meeting on Friday, they’ve agreed on a production cut, and the U.S. is expected the API crude change fell release on tomorrow morning.

The first market focus today was the RBA decision on interest rates. The Australian and New Zealand dollars fell as investors braced themselves for the RBA rate-cutting comments. Before the results of the meeting were announced, speculative profits were unwound and the Australian and New Zealand dollars rose nearly 100 ideas. In addition, during the European trading session, the governor and members of the bank of England attended the meeting and the first reading of the CPI monthly rate and annual rate for February in the eurozone.

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

11:39 RBA interest rate decision ***
17:30 Bank of England governor and members meeting ***
18:00 Eurozone unemployment rate and PPI in January **
18:00 Eurozone CPI for February ***
The next day 05:30 US API crude oil stocks change ***

EURUSD
1.1185/1.1195 resistance
1.1085/1.1075 support
Forecasts for the eurozone's monthly and annualized CPI growth in February, coupled with a better-than-expected reading by eurozone manufacturing PMI yesterday, and a lower-than-expected reading by the U.S. Markit and ISM manufacturing PMI in February. The euro tried out resistance at $1.1100 and broke through it, having traded as high as $1.1183. Technically, if the eurozone economy grows in February, the market is predicting weak U.S. jobs data for February. The euro is expected to test late-year highs against the dollar this week at $1.1200 or $1.1240.

Pound to dollar
1.2800/1.2810 resistance
1.2730/1.2720 support
The pound fell after the British government formally discussed a deal with the EU Brexit committee, with the British prime minister sounding tough on the terms of the deal being negotiated and the European commission unhappy with the government's demands. The governor of the Bank of England and members meeting today as markets wait to see if the budget will be strengthened to boost the economy. Expect good news and bad news in the short term and watch the British pound and cross-rate volatility. Temporary technical volatility is expected, with pound trading between $1.2720 and $1.2800. If the governor of the Bank of England delivers a budget for the new fiscal year that strengthens the recovery, the pound could breakthrough 1.28 against the dollar, up from 1.30.

Australian dollar
0.6575/0.6585 resistance
0.6465/0.6450 support
Earlier, the RBA officials have said rate cuts, bearish on the Australian dollar. Whether and when to cut rates will be the focus as the RBA announces its decision today. Yesterday estimated that the Australian dollar against the dollar after the announcement of the results, the trend gradually see stability. But seeing that investors have taken profit in short positions, the Australian dollar rebounded. If the RBA releases its rate cut or cuts directly today, it is believed that the AUDUSD will be limited below the 0.66 level and further supported by 0.6465 or 0.6450. It's just that the market is predicting a weak US jobs data in February, and that's where the decline could end for now.

Dollar to yen
108.55/108.65 resistance
107.45/107.35 support
Dow futures rebounded strongly and the dollar rose against the Japanese yen as risk aversion cooled. But as Japan's fiscal year draws to a close and companies bring money back to Japan, demand for yen funds is slowly rising, limiting the dollar's rise against the yen. It is believed that the dollar/yen will maintain a downward trend in March, with preliminary estimates of a possible test to the 106 level. Consumption may also weaken on expectations of weak U.S. job data in February. If global stocks fall and U.S. economic data show weakness, it could accelerate to the 106 level target, or it could test important support at the 2019 low of 104.45.

USDCAD
1.3385/1.3400 resistance
1.3325/1.3310 support
On Friday, OPEC and energy ministers met to discuss a deal to cut output, which is expected to stabilize crude oil prices. The Canadian dollar rose yesterday as oil prices rebounded on expectations that the federal reserve with G10 Central Banks could cut interest rates to stimulate the economy and boost demand for crude. Technically, the dollar/Canadian dollar is expected to peak at 1.34, heading lower towards the 1.32 level during the crude oil price keep upward.

US crude oil futures
49.15/50.45 resistance
47.40/46.55 support
OPEC meets with energy ministers on Friday to discuss production cuts. In addition, oil prices rebounded on expectations that interest rate cuts by the federal reserve with other G10 Central Banks around the world could boost demand for crude. Oil prices could move above the $52 target if production cuts could be increased to 1 million barrels and G10 Central Banks cut interest rates together. The technical rebound is now 50% at $49.15 and 62% at 50.45. 73.6% is nearly $51.75, respectively.

Gold
1625/1628 resistance
1586/1584 support
Stock markets around the world rebounded from their losses, with Dow futures rebounded 1,300 points yesterday and gold price falling. But global stock markets are expected to continue to suffer from economic weakness, G10 Central Banks plan to cut interest rates and currencies around the world depreciate. Believe it, the gold price still has room to rise. Technically, the key support level for gold is around $1575, and if it doesn't break the support, it's still looking for resistance at $1610 to $1630.

U.S. Dow Jones industrial average futures US30
26875/27290 resistance
25845/25540 support
While the global economy remains uncertain, U.S. economic and job data for February was weak, bearish for Dow futures. But investors expect the Fed to slash interest rates in response to the U.S. economic slowdown. After falling more than 4,000 points, Dow futures rebounded 1,300 points yesterday. For now, it's important to watch for signs that coronavirus is developing globally, especially in the United States, to see if comments from the U.S. President and federal reserve officials and U.S. economic data for February could influence another drop in Dow futures. Technically, significant resistance ranges from 26875 to 27290.

BTCUSD:
9245/ 9550 resistance
8550 / 8355 support Unexpected market demand declined in cryptocurrencies, the bitcoin price fell sharply before. Most of the cryptocurrency’s price fell and transfer to the traditional hedge market. Technically, the important support at $8250. Now, investors foresee the G10 Central Bank may cut interest rate or QE, the demand of the crypto would rebound.

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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