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ATFX Market Outlook, 2020 Mar 20
Personal opinions today:
The coronavirus is spreading in Europe and the United States, and the number of cases of infection is increasing. Instead, the virus has declined in Asia. But many countries in Europe and the United States have implemented work-at-home policies, restricting citizens from going out, and canceling entertainment and major events. In addition, most countries restricted entry and exit, and tourism and related services and business activities declined significantly. Manufacturing exports from China and the region were affected, and Asian currencies continued to fall.
US President Trump has signed a second rescue bill and is preparing to enact more measures to stabilize and stimulate the economy. Dow futures continued to fall, a global stock market downturn, money flows into US dollar bonds, the US dollar index rose to 102, across the board against the dollar currency fell. Gold hit $1,455 then rebounded because investors believe the monetary policy would support gold values. Crude oil also resumed buying at $22 before New York's April futures finished their last session, rebounding to as high as $28.29.
[Important financial data and events to watch]
Note: * denotes importance
Japan Holiday, Tokyo stock exchange was closed **
09:30 China one-year lending market quote rate * * *
15:00 Germany February PPI * *
17:00 Eurozone current account in January **
20:30 Canada retail sales in January * * *
22:00 U.S February existing home sales total * *
The next day 02:30 New York crude April futures closed * * *
The European Central Bank announced a $750 billion bond-buying programme yesterday was seen by investors as vulnerable to uncertainty over Europe's economic outlook. Add to that the financial pressures in the Eurozone and the threat of a coronavirus in Europe, and the economic slowdown is even worse than any trade wars. Lack of interest in the market, money out of the market to dollar assets, bearish Euro. Technically, the Euro broke 1.0855 support, next-level support watch out for 1.0570 and may test 2017 low, 1.0500 or 2016 low, 1.0355. If the Euro rebounds against the dollar, watch for 1.0780 as important technical resistance.
The pound to the dollar
In the current outbreak, the financial rescue measures introduced by the British finance minister have failed to rescue the British economy. The market expects the Bank of England to further cut interest rates or other QE next week, if not in time to deliver measures such as the Fed’s rescue, enough to reassure the market, and the pound to test a lower level against the dollar, such as 1.10. Believe, the short-term pound/dollar first resistance level reference is 1.1660, important resistance is 1.1795.
Australian dollar/US dollar
New cases of coronavirus are on the rise in Australia. The RBA stepped up its program to buy government bonds yesterday, freeing up an AU$50 billion in liquidity to prop up the economy but stopped short of announcing other stimulus measures. Believe that the RBA release of funds, there are still follow-up measures to be launched, will continue to be bearish Australian dollar. Yesterday, the Australian dollar had seen 0.5515 support against the US dollar, the short-term looking at 0.5885 resistance. Suggest that important resistance failed to break, the Australian dollar continued to test low against the US dollar.
Dollar to Japanese yen
Japan is on holiday today, but it is believed that the Bank of Japan is still closely watching the global central bank monetary and fiscal policy measures, in line with the Bank of Japan followed the action. Today, Friday, there may be a re-emergence of weekend unwinding. In today's Asian session, the USDJPY had a high of 111.35, estimated with the help of the unwinding effect, there is a chance to test the 109 level.
US dollar/Canadian dollar
1.4380/1.4360 support level
Crude prices rebounded after a sharp sell-off, with U.S. oil prices rebounding after hitting $20.7 yesterday, while the Canadian dollar followed suit. Believe that the USDCAD trend continues to be dominated by oil prices. Canada announced January retail sales today, keep an eye out. If the data disappoints the market, the U.S. dollar could test $1.45 or $1.46 against the Canadian dollar.
US crude oil futures
Interest rate cuts by global Central Banks to stimulate the economy is expected to boost investment and consumer confidence. The start of quantitative easing by the federal reserve and a second effort by the U.S. government to stimulate the economy could help stabilize oil prices. Recently, oil prices rebounded after U.S. futures fell to the $20 level, supported by buying. This, combined with the unwinding of a short position before the final trading session in April crude oil futures in New York, triggered technical buying. Just the current rally may be short term, before $29 resistance, watch out for a correction. In addition, the outbreak seriously affected the global economy and production, the price of crude oil has not yet recovered to normal demand level, the price is still likely to test below $23.
The US President and Fed announced emergency measures to increase the size of the repurchase of Treasury bonds and rescue funds. The federal reserve started quantitative easing and cut interest rates, investors estimated bullish gold prices. Current estimates, global monetary policy is still to increase the intensity of easing measures, gold prices are expected to continue to rise. Technically, at the $1,450 level, there has been a lot of buying support and it is worth buying gold at the relevant level. Just the recent volatility of gold prices, pay attention to money management.
Dow Jones industrial average futures US30
For the week as a whole, Dow futures have been trading lower. The key is the impact of the outbreak on investor confidence and corporate earnings, reflected in the recent decline. Of course, the start of quantitative easing by the federal reserve and more economic stimulus measures are expected to guide money into equity assets and the stock market is expected to rise. Keeping an eye out for an easing of the coronavirus in the U.S. and Europe could boost stocks. In addition, the weekend futures contract unwound, Dow futures are expected to adjust the decline, possibly test 20305 or 20485 resistance.
6550/ 6800 resistance
5750 / 5500 support
The federal reserve's decision to cut interest rates by 100 basis points and start a worth $700bn in the QE program. Technically, the bitcoin price would rebound. The bitcoin price hit the first target $6000, then looking for higher. Next could test $6800 or $7000.
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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