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ATFX Market Outlook, 2020 Mar 4
Personal opinions today:
The federal reserve cut interest rates by half a percentage basis point suddenly, following yesterday's surprise rate cut by the Reserve Bank of Australia. The federal ceiling rate was cut to 1.25% from 1.75%. The Fed sudden cut-rate surprised investors, dow futures falling more than 1,000 points last night. Dow futures rebounded more than 300 points as investor sentiment stabilized, but were still down more than 700 points from the last close.
When the federal reserve suddenly cut interest rates, dollar assets fell and the dollar followed. Overnight, the gold price jumped more than $50 to $1,652.50. The price of crude oil had risen after the federal reserve cut interest rates to rescue a potentially weak economy and ahead of an agreement between OPEC and energy producers to cut output. This morning, however, the U.S. reported a rise in API crude oil inventories last week, limiting the scope for a rebound in oil futures prices, only to return to $48.55.
With so many financial data and events on the agenda today, investors must keep an eye on market volatility. Particular attention will be paid to the evening meeting of EU finance ministers with the European Central Bank and the final reading of the U.S. ADP payroll and services PMI for February. In addition, tomorrow morning at 3 am, the federal reserve releases its Beige Book report on economic conditions, which may provide a better guess as to whether the fed's sudden move to cut interest rates is appropriate.
[Important financial data and events]
Note: * refers to the degree of importance
08:30 Australia Q4 GDP annual rate ***
09:45 China service sector PMI in February ***
15:30 Swiss CPI in February **
16:50 France final PMI for February *
16:55 German services PMI final reading for February ***
17:00 Eurozone services PMI final reading for February **
17:30 UK services PMI for February **
18:00 Eurozone retail sales in January ***
21:00 EU finance ministers with ECB meeting ***
21:15 U.S. ADP payroll for February ***
22:45 U.S. Markit services PMI final for February ***
23:00 Bank of Canada interest rate decision ***
23:00 U.S. ISM non-manufacturing PMI for February **
23:30 U.S. EIA crude oil inventories change **
At 03:00 the next day, the Fed Beige book ***
In Europe today, the final reading of the services PMI for February in Germany and the Eurozone and Eurozone retail sales data for January were watched. In addition, European Union finance ministers with the ECB meeting, the latest monetary policy situation is the focus of investors. A rate cut by the European central bank following the Fed would be bearish for the Euro. Instead, the ECB used measures other than interest rate cuts, which could have bullish the Euro and Swiss franc. In addition, the performance of U.S. ADP payrolls in February can directly affect the performance of the dollar and indirectly affect the Euro. Technically, if the Eurozone economy show growth in February, compared with the weak U.S. jobs data for February. The Euro is expected to test late-year highs at 1.1200 or 1.1240.
Pound to dollar
UK fundamentals are negative for the pound, but the fed's sudden interest rate cut has caused the pound to rebound. Temporary technical volatility is expected to limit resistance against the dollar to 1.2900.
The RBA cut rates yesterday and Australia Q4 GDP annualized rate rose unexpectedly. Coupled with the Fed rate cut, the Australian dollar rebounded against the U.S. dollar but remained limited at 0.66. It's worth keeping an eye on US data, included ADP payrolls, Markit final services PMI and the ISM non-manufacturing PMI for February tonight.
Dollar to yen
Fed rate cuts, the dollar-yen spread narrowed. Coupled with Dow futures fell, capital fund flows into the yen and annual Japanese financial settlement flows back into Japan, and the dollar/yen traded as high as 106.85, in line with a recent preliminary estimate by this analysis that it could test the 106 level. If U.S. ADP payrolls for February is lower and other U.S. economic data are slowdown today, and global stocks fall, it could accelerate to the 106.00 target and further test the important support of the 2019 low of 104.45.
Opec and energy ministers will meet this week to discuss a deal to cut output, which is expected to stabilize crude prices. The Canadian dollar rose as oil prices rebounded after the federal reserve cut interest rates to boost demand for crude. One of the key points is whether the bank of Canada will follow the federal reserve in cutting interest rates. Technically, depending on the fundamentals, the USD/CAD may be more volatile. Please keep an eye on the bank of Canada's rate decision.
US crude oil futures
OPEC meets with energy ministers on Friday to discuss production cuts. The fed's surprise rate cut, which other central banks are likely to follow, could lead to a rebound in oil prices. Crude could move up to the $52 target on further news that OPEC and other oil producer groups could increase their combined output to 1 million barrels. The technical rebound is now 50% at $49.15, 62% at $50.45 and 73.6% at nearly $51.75.
Gold prices rebounded in the wake of the fed's surprise rate cut, moving faster than this analysis had expected. Technically, gold has broken through resistance of $1,610 to $1,630, as shown above at $1,652. Now, the Fed has cut rates, gold prices have been reflected. Gold prices would be bullish in the evening as European Union finance ministers met with the European central bank to discuss whether a drop in interest rates or a change in monetary policy would be bearish for the euro. Also on investors' minds were today's U.S. jobs and services PMI data for February tonight and the Fed Beige book tomorrow morning Technically, the first significant resistance to gold is at $1,665.
U.S. Dow Jones industrial average futures US30
Yesterday, this analysis mentioned that technical analysis estimates dow futures important resistance in the range of 26875 and 27290. That technical resistance remains in place, and if February U.S. ADP payroll and the services PMI are weak, Dow futures could see a sudden drop in resistance.
9245/ 9550 resistance
8550 / 8355 support Unexpected market demand declined in cryptocurrencies, the bitcoin price fell sharply before. Most cryptocurrencies’ prices fell and transfer to the traditional hedge market. Technically, the important support at $8250. Now, investors foresee the G7 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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