16/03/2020
IMPORTANT DISCLAIMER
The information of this report is of a general nature only. It is not a personal financial advice. It does not take into account your objectives, financial situation and personal needs.
a-Quant is not responsible for your actions and recommends you contact a licensed financial advisor before acting on any information contained in this general information report.
General Comment
The unchartered territory of the world economy in between coronavirus and trade wars at the oil create new data in the markets with extremely high volatility. The great fear is a liquidity crisis in the global system which may occur from the bankruptcy of big companies such as oil companies, aviation companies, tourism companies etc. In the markets out of USA there’s already a lack of dollars which lead to the big USD recovery last Friday. It is a case for very experienced traders and it’s good for nonpro fessional investors to wait until the high volatility calms down before they act.
EURUSD
Strongly bearish week for EURUSD since USD appeared very strong. The pair touched 1.15 on last Monday but it closed at 1.11 on Friday. The US Interest Rates cut a few hours ago by FED, by 1% or 100 bps and from 1.25% the current price is 0.25%. Also, we had the announcement for quantitative easing in order to stop the consequences from coronavirus in economy. Reasonably, with such announcements we would wait a bigger raise at EURUSD but the pair is hardly moving around 1.1140. Maybe the markets are waiting the decisions from Eurogroup on this Monday 16/3, in order to have a clearer insight. In USA, excluding the Retail Sales announcement next Tuesday, there are no other important economic announcements. In Europe, as we’ve already mentioned, there’s the Eurogroup meeting this Monday and the Ecofin on Tuesday while there’s also interest in the Sentiment announcement in Germany in the same day. It means that the markets will move for one more week under the coronavirus effects and long is our selection for the current week.
GBPUSD
A real free-fall for GBPUSD last week which started from 1.3073 and closed last Friday below 1.23, reaching the price zone of the last autumn where there was a very big uncertainty due Brexit. A very high volatility which we don’t expect to end soon but there’s a strong scenario for a pair’s recovery this week because A. it is moving to very low and oversold levels and B. FED in USA announced a new rates cut & quantitative easing. For these reasons, we prefer being buyers this week. From UK, we expect to see the January ILO Unemployment Rate on Tuesday but we should not forget that January was a month without serious effects from coronavirus.
USDJPY
A strong recovery for USDJPY last week which managed to get over last Monday’s shock where the pair approached the price of 101. It finally closed on Friday at 108 with a big raise and a relative very high volatility. The 10-years US bond yield touched the price of 1% in the end of last week but currently, after FED’s news it is moving around 0.65%. USDJPY though after that news is moving bearishly to 106.50. Early this Monday, the Japanese Prime Minister Shinzo Abe, claimed that he’s ready to take unprecedented economic policies in order to face the impacts of coronavirus. Due to latest FED news and due to JPY, which is a safe-haven asset, we’ll open sell positions this week, targeting the price area of 105 even if in such a high volatility era the targets and the supports/resistances do not make perfect sense.
EURJPY
Strong bullish trend for EURJPY last week since it started from 118.26 on Monday and closed at 119.90 on Friday, a bit below the milestone price of 120. Early this Monday, the pair has serious pressures and it is currently moving below 119. The main support at 118.50 is a price level that may give the trend of this week because if the pair will stay above this level it’s possible for the uptrend to carry on but on the contrary, a bearish breakout of 118.50 may bring scenarios for prices around 117 again. We prefer the 2nd option that’s why we’ll open sell positions.
EURGBP
The biggest raise of the last months we had last week for EURGBP. More specifically, the pair had a weekly open at 0.8680 and a weekly close at 0.9036, a price zone that we hadn’t seen since the beginning of last autumn, in between the Brexit uncertainty. There’s a serious probability for a GBP recovery so if we see a clear bearish breakout of 0.90 we’ll open sell positions.
USDCAD
Another bullish week for USDCAD which opened at 1.3550 and closed a bit above 1.38, having touched early last Friday even 1.40. After the FED’s announcements the pair pushed to 1.3730 but currently it is recovering and it is moving already close to 1.39. It’s obvious that the pair has not been affected seriously and in between the new oil trade war between Saudi Arabia and Russia, we may see USDCAD trying to touch 1.40 this week again, that is why we remain buyers. The Consumer Price Index this Wednesday and the Retail Sales on Friday are the most important news from the Canadian economy this week but it’s also obvious that the coronavirus economy effects and the measures from the governments and central banks will dominate the markets again.
USDCHF
Strong bullish reaction for USDCHF last week which opened at 0.9326 and managed to close above 0.95. The FED announcement has not affected seriously the pair so far which is currently moving close to 0.9450. Next Friday, we have the Interest Rates decision by SNB but we seriously doubt if there can be a change from the current price of -0.75%. Last week though, the Swiss government announced a package of $10.5B in order to battle the economic effects of the coronavirus. If the pair is able to exceed 0.95 it may climb up to the resistance of 0.9630 and this will be our strategy for this week: buy positions above 0.95.
AUDUSD
A huge drop for AUDUSD last week since the pair from the price area of 0.66, closed on Friday at 0.6182 which a 11.5 years lowest price. The announcements from China early this morning was in a mood of disaster. The Industrial Production dropped 13.5% and the Retail Sales dropped 20.5%. Also, earlier we had an announcement by RBA about a quantitative easing for supporting the economy, leaving also hints for a new rate cut during the session of April, 7th (the current Interest Rates price in Australia is 0.5%.) However, AUDUSD is not pushed in the expected manner and it’s currently moving around 0.6170. There’s evidence for a bullish recovery so we’ll open buy positions this week.
SP500
The downtrend carried on for SP500 which had total losses close to 10% but the truth is that after Trump’s statements last Friday, there was a relief because the price of the Index had dropped even below 2,400 points. Early this Monday, the futures of the Index give us a good idea since drop around 5% and in between the coronavirus crisis we may see the bears carry on and expand. We remain sellers for one more week.
DAX30
Heavily bearish week for DAX30 which lost more than 16%! The futures for the Index early this week perform losses close to 8%, so there’s no room for optimism unless in Eurogroup and Ecofin we see some relief announcements. We remain sellers for one more week too.
FTSE100
Another heavily bearish week for FTSE100 which lost about 12.6%. Current Monday’s futures price is also dropping so we’re looking for a support to the free-fall of the Index. Going short is the obvious call.
Gold
Strongly corrective movements we saw last week for gold which closed at $1,529 with losses more than 8.6%. The strong USD of last week helped on this but in the current week with FED announcements and rate cut of 1%, the tendencies of cutting rates from other central banks as well and the expected decisions from Eurogroup and Ecofin in Europe (which is in the middle of the coronavirus pandemics as WHO announced), do not point to a recovery. At the moment, gold is moving close to $1,540 exactly on its important support. If gold lose this level, there’s a danger to drop even at $1,500 but if it can manage to move above $1,540, there’s a serious probability for price areas at $1,590 – $1,600. By selecting the second option, we’ll open long positions this week.
US Oil
It was a week of high volatility for oil which had a range between $27.63 and $36.58, closing finally at $33,23 and weekly losses more than 20%, since the gap of last Monday was very big. There is a solid price war between Saudi Arabia and Russia. Saudi Arabia decided to increase the oil production unilaterally and this had as a result the crash of the oil price without having as a country, serious consequence because due to very low production cost, Saudi Arabia can manage very low prices. Early this Monday, the oil price is moving below $31 and by keeping in mind that last week we saw a price range channel between $30 and $35, we will trust a range strategy for this week too.
Bitcoin
A very disappointing week for Bitcoin which crashed from $8,036 to $5,343 while last Friday we saw prices even close to $3,850! During last Friday though, there was a recovery but a drop more than 50% in a few days and recovery of 55% in a few hours apply a tragic risk attitude for Bitcoin. The crypto traders seem very disappointed with such a price action and early this Monday, Bitcoin has taken a downtrend and it’s currently moving below $5,000. If it stays below this level in the next days, we may see new strong pressures on Bitcoin and in such a case, we cannot exclude even prices close to $3,000. We are sellers this week.
