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GBP/JPYHi everyone . This is the first analysis that I present to you dear friends. Over the past few months, one of the most volatile and currency pairs has been the British pound against the Japanese yen. In the future, we will see the beginning of the fall of the pound. Now, if the price can break the support area and close a 4-hour candle below it, after resetting it, we will enter the deal in 1 hour or 30 minute timeframe. The last point is the Ichimoku cloud, below which the price closes OANDA:GBPJPY .
Short
by majesty72
2
Could Gold Hit $1,800?Gold is back on the upside, trading at $1,710/oz after a 3 day losing streak as the US Dollar weakens. After hitting a peak at $1,731, gold lost some of its momentum, but is now looking to repeat its pattern from a few weeks ago. The yellow metal has been making sharp gains since the start of the month, rising to hit $1,725 before experiencing a short sell-off due to being gatekept by the strength of the US Dollar, as well as the shortage of physical gold in New York. However, that was short lived as gold was able to surpass its previous high in just a matter of days. Therefore, this current price can be seen as simply a repeat of its previous movements, as evidenced by the fact that it is moving to the upside once more, albeit slowly. The movement of gold in recent weeks has shown that it is now firmly above the $1,700 mark. On a monthly timeframe, gold is nearing the $1,750 resistance level that it crossed back in late 2012, as seen in the chart below.This is the next big step for gold, and if it breaks $1,750 definitively, it is then also not unreasonable to suggest that it could reach $1,800/oz in a matter of months. Back in March, Goldman Sachs predicted that gold would reach $1,800 in the next 12-24 months. Now an $1,800/oz figure is looking possible before the end of the year. A breakthrough of this resistance level would prove that appetite for gold is still strong, and that a strong US Dollar is still not enough to curtail the strength of this safe haven. Factors currently pushing down demand for the USD include stock futures rising, increasing risk appetite slightly. Other currencies have also picked up strength, such as the Japanese Yen, which is currently trading at a 6 week high against the greenback, as well as both the Aussie and Kiwi Dollars rising as well, as detailed in my post yesterday. No matter what happens, it would be wise to continue to keep tabs on gold as the economic situation progresses.
OANDA:XAUUSD
by BlackBull_Markets
1
Aussie and Kiwi Dollars On the Comeback as They Stamp Out COVIDThe Australian Dollar has seen a resurgence in recent days, following its massive drop mid March. At its lowest, the Aussie had traded at 0.5749 against the USD, but has steadily been climbing back up, and is now at 0.6482 and continuing to climb. Moving ahead, AUD/USD has a strong support at 0.6439, which gives further credence for it to keep rising. Likewise, the New Zealand Dollar has also made a comeback, although not to the same level. The NZD/USD pair is currently trading at 0.6039, lower than its neighbour. This is most likely due to the difference in the severity of the lockdown between the two countries. For the past month, New Zealand has been in Level 4 of its COVID-19 alert phase, which meant that the entire country was under lockdown. Of course, this has meant that the economy has been under severe strain. While New Zealand has now moved back to Level 3 as of today, with over 400,000 workers returning to their jobs. That’s almost 10% of the population, which will undoubtedly give a boost to the Kiwi Dollar, but many businesses still remain closed. On the contrary, while Australia has also been in lockdown, it has varied by state, and overall has been less restrictive than New Zealand’s. For example, while in New Zealand people have not been allowed to leave their homes unless they were essential workers or for exercise, Australians can still order food, and shop for some non-essential items. This has allowed the Australian economy to not suffer the same level of stress, and thus is most likely the reason why the Aussie has made larger gains over the past few weeks. While it is still uncertain how long Australia’s lockdown will last, the effectiveness of its lockdown has given investors hope in the strength of the Aussie Dollar. While the coronavirus may have impacted the Australian and New Zealand Dollars in the short term, the fact that they have been able to effectively stop the virus from spreading any further gives hope for investors that their economies will be able to recover sooner and faster than other countries.
by BlackBull_Markets
Pound Shrugs Off Consumer Confidence DataUK Consumer Confidence was unchanged from its 12 year low, according to a survey by polling firm GfK done for the first two weeks of April. After last month’s figure of -34, the lowest it had been since February 2009, the number figure remained the same as UK citizens await the end of the lockdown. Consumer confidence data is a measure of peoples’ willingness to make major purchases. The lowest figure ever recorded for UK consumer confidence was -39, a figure reached during 2008, during the global financial crisis. The current figure is obviously due to the inability for consumers to make purchases beyond necessities, but it is also due to the fears surrounding the current economic climate and the loss of jobs. Despite this news, the Pound remained steady for the day’s trading, currently at 1.2350 for the Asian trading session. On the technical side, it fell through the 1.2460 support level from when we last looked at the Pound, and is now looking to trade between 1.2380 and 1.2280.The lack of any major movement from the Pound is most likely due to the lack of change in the consumer confidence figure, even though it continues to be the largest ever decline. In March consumer confidence had dropped by a stunning 27 points. As for this month’s data, analysts at GfK are still hesitant to say whether or not this figure is now stabilised due to consumers becoming adjusted to their lockdown lives, or if further lows are possible. Investors trading the GBP/USD pair, as well as other Pound currency pairs, are most likely also waiting for the UK Retail Sales report for March, which is due later today. UPDATE: the UK Retail Sales data has just been released, with a fall of -5.1% for the month of March. This figure exceeded predictions of -4.0%. The Pound has reacted by moving back towards a low of 1.2300. It is currently at 1.2325 against the US Dollar and looking to trade lower.
by BlackBull_Markets
1
Wall Street Stays FlatUS stocks have not seen any major changes this week, staying uncharacteristically calm despite headlines such as the oil price crash. The Dow Jones gained 457 points on its Wednesday session, a jump of 2%. It is now trading at 23,400 points on the hourly chart. Likewise, the S&P 500 and NASDAQ indices saw similar gains, climbing 2.3% and 2,8%, respectively. However, this is most likely as investors are also still awaiting news such as this week’s jobless claims data. Latest predictions expect around 4.2 million new unemployment claims to be filed, bringing the total up to 26 million claims in just 5 weeks. Likewise, the US Senate just passed another bill to aid in the fight against the coronavirus in the State. After weeks of negotiations, the Senate passed a $500 billion bill in order to help small businesses, and it is expected to go to the House of Representatives later this week. This news did give some relief to the stock markets, as they now look to extend their gains for the second session in a row. But there are reasons to continue being bearish about the stock market. Investors are vying for stocks to gain momentum again, with news such President Trump pushing state governors to ease their lockdowns and begin reopening their state borders again. However, reopening so early, before the virus is under control, poses the risk of a wave of new infections flooding in. This poses the risk of causing more damage to the economy in the long term. Despite Trump’s eagerness to reopen the economy and start recovering the damage that virus has caused the stock market, the opposite could end up happening if he pulls the trigger too soon.
U
by BlackBull_Markets
Gold Challenged by US Dollar StrengthAfter reaching close to $1,740 just a week ago, gold has now fallen and is hovering at the $1,680 support level. For the Asian session, gold remained largely unchanged, as it moved only 1% to the downside. Gold’s status as the king of safe havens has been challenged by the US Dollar, which continues to consolidate above 100 points on the Dollar Index. Gold’s strength is inversely proportional to that of the US Dollar, and when the price of crude oil crashed earlier this week, investors flocked to the Dollar for liquidity, just as they had done when the stock market crashed. The oil crash was once again a stark reminder of the current market volatility and risk sentiment, driving investors back to the greenback for safety as a result. Global governments and central banks have already pledged as much money as possible into the economy in a desperate attempt to mitigate the economic damage that the coronavirus pandemic is causing. But there is still currently extreme uncertainty over whether or not the crisis could continue to worsen or be prolonged. As long as the virus is still active, the economy will not be able to function properly, as people will have to maintain social distancing and many businesses such as retail will be affected as a result. Therefore, it is possible that all the money that governments have to spend could turn out to still not be enough. Normally such a crisis scenario is where gold shines the brightest, but a number of factors, such as the shortage of physical gold in New York, where contracts are traded, and the increased demand for liquid cash as a safety net, has caused the USD to rise in strength as well. For gold to rise the US Dollar would have to ease in strength, which seems unlikely in the current scenario. But while not as dominant as expected, gold is still strong. Due to the current risk sentiment and gold’s ability to retain its value, it is still an strong option at the moment, so we should not see gold making any drastic price movements.
OANDA:XAUUSD
by BlackBull_Markets
1
Crude Oil Drops Below $0 For The First Time in HistoryIn a truly bizarre turn of events, crude oil has dropped below $0 for the first time in history. Over the course of the day, traders watched as WTI crude oil crashed during its trading session, falling to $15 per barrel, and then $11, before finally giving out and turning negative. It is now so bad that traders are willing to pay for oil to be taken off their hands. At its peak, oil futures contracts for May were trading at -$40.32 per barrel, before ending the trading day at -$37.63. This is a 306% drop in price. The biggest factor affecting oil right now, as I stated before, is the lack of global demand. Oil consumption has fallen 30%, due to the fact that planes are stranded, and all forms of travel is restricted. And now, due to the lack of demand, traders are left with a large excess supply with nowhere to store it, and thus are trying to dump it as fast as possible. The main storage facilities for oil, which are in Cushing, Oklahoma, are fearful that they will run out of storage. The amount of oil stored there rose 9% in the past week, equalling to about 61 million barrels in total. It is estimated that there are currently 160 million barrels of oil sitting in storage tankers around the world, due to the fact that refiners are not processing said oil. Despite this drastic plunge, it is does not seem like traders think this will be an extended issue, as prices for the June delivery contract were more normal comparatively, with only a 14% drop, down to $21.32 per barrel. Comparatively, prices for Brent crude also fell, but was nowhere near as bad as crude, because storage for it is more readily available. When asked about the price drop in oil, US President Donald Trump said that it was a short term drop and that more production cuts were needed. He also said that the US government was looking into buying 75 million barrels of oil while the price was low, in order to place in strategic petroleum reserves. Usually for consumers, a price drop in oil means lower prices for petrol. However, with this current price crash, it is unclear just how consumer prices will be affected.
TVC:USOIL
by BlackBull_Markets
NZD Bolstered By End Of Lockdown AnnouncementThe New Zealand Dollar made a jump at 4am GMT today, during a press conference where New Zealand Prime Minister Jacinda Ardern announced that the country would be ending its Level 4 lockdown at the end of Monday 27th April, one week from now. New Zealand will move back down to Level 3 of its alert phase. Immediately after the announcement was made, the NZD rose by almost 0.6% to a high of 0.6058 to the US Dollar. The Kiwi Dollar had been picking up momentum over the past week, boosted by positive data surrounding the number of daily COVID-19 cases, and this announcement is sure to extend that momentum further. Since the 15th the number of daily new cases of coronavirus in the country has been consistently under 20, leading investors to become more optimistic that the lockdown would end soon and businesses could open again. However life under level 3 is still mostly similar to that of Level 4, only with less restrictions surrounding essential businesses. Employees are still being asked to work from home if possible, and retail businesses and restaurants can only open if they can provide non contact methods of purchasing such as online shopping or takeaways. Therefore, this move seems to have been made to minimise the risk of a potential outbreak as well as how widespread it would be, while giving citizens a reprieve from the strict lockdown rules of the past month, and allowing the economy to begin recovering in some capacity, even if it’s limited. In other news WTI crude oil dropped below $15 a barrel today, a drop of 8%, and is continuing its freefall. These prices for oil are now the lowest since 1999. As outlined in my article last week, oil is suffering heavily from a lack of global demand, as oil consumption has gone down 30% just in the last month alone, and it seems that the deal reached between OPEC and Russia to pull back production has been unable to correct oil prices. This deal will also not come into effect until May, which is most likely why oil did not see any movements to the upside after the announcement.
by BlackBull_Markets
1
Crude Oil Continuing to Flounder Below $20On the 12th of April, the OPEC alliance, headed by Saudi Arabia, and Russia reached an agreement to cut the production of oil by 9.7 million barrels per day until June, effectively ending the ongoing price war between the two countries. As well as this they will continue to restrain output for at least the next two years. Following this news oil was able to climb back up to $24.50 per barrel, but since then has continued to steadily bleed out, now dropping below $20 in recent days. On the hourly timescale, crude oil will find support at the $19.53 mark if it continues to bleed out, and resistance at $20.32 if it can manage to make a recovery from these lows. Not too long ago, after tensions between Saudi Arabia and Russia flared up once more, US President Donald Trump tweeted that he had spoken to both parties and expected a production drop of 10 to even 15 million barrels for WTI crude oil. Investors initially reacted to these tweets by surging the price of WTI crude all the way up to $28 per barrel, before doubts began to settle in over whether or not such a monumental deal was able to be struck between the two countries. Now the agreement has been made, one that is even measuring up to Trump’s claims, but oil’s recovery is nowhere to be found. And part of this is that OPEC is now forecasting that the amount of oil consumption in the world will fall by 6.9 million barrels per day for the rest of the year, sharply revising its earlier predictions of merely 60,000 barrels. These figures are most likely the result of several more countries entering lockdown, such as Japan, and others such as France extending theirs. Of course, the restriction of travel means that oil consumption will fall sharply. As well as this, the OPEC alliance is still on shaky grounds. After negotiations failed between the two countries, Saudi Arabia immediately engaged in a price war by increasing its oil production in an attempt to undermine Russia. And just last week the two countries were still on hostile terms, each blaming the other for causing the price war to begin with. It was only at the insistence of the US were the two countries able to come together to reach an agreement. More news affecting WTI’s fall was the news that China had seen its first economic retraction since 1992. China, the first country to be hit by the full impact of the coronavirus, reported a 6.8% contraction in its gross domestic product for its first quarter, even lower than already pessimistic expectations of 6.5%. China is one of the biggest buyers of crude oil, and following this news oil dropped by 30 cents, from $20.10 down to $19.74 per barrel. And China’s negative data is only the start. As the global economy grinds to a halt, so too does the need for oil. As long as demand is nowhere to be found, oil will continue to stay at its current lows.
TVC:USOIL
by BlackBull_Markets
Stocks Fall As Economic Damage Begins To Be RevealedUS stocks extended losses at the close of yesterday’s trading session as news came that US retail sales had dropped 8.7% from February to March, according to a report from the Commerce Department. The Dow Jones, S&P 500, and NASDAQ fell 1.9%, 2.2% and 1.4%, respectively. The Dow is now currently trading at 23,400 points.This news comes as no surprise, as the global lockdown has quickly stopped people from being able to go anywhere or spend any of their money. While grocery store sales were the only sector to see an increase, as expected, other sectors such as electronics, food service, and especially clothing and accessories stores all dropped. This report release is one of the first indications of the economic impact that the coronavirus pandemic has caused in the US. The NFP release at the start of this month only covered the 8-14th of March, and although the figures released were in the negatives, did not fully reflect the scope of the virus’ impact. The first state to enter lockdown, California, only did so on the 20th March. Stocks had been making a rebound in recent weeks, as investors were spurred on by optimistic comments made by US President Donald Trump, who said that he would announce guidelines to reopen the US economy on Thursday, claiming that the US had passes the peak of its coronavirus infections. Trump also suggested that some US states could end lockdown and open again by May 1st. However, these comments come just a day after Anthony Fauci, the leading scientist of the coronavirus task force, said that early May was too optimistic a date to reopen state borders. All three of the major stock indices had managed to recover the catastrophic losses made since the virus properly first hit the States and threw the markets into chaos, causing unprecedented volatility and the Dow Jones to drop below 20,000 points and erasing all gains made since Trump’s inauguration. However after peaking at 24,000 points in the previous trading session, the Dow has once again moved to the downside, following a barrage of new data yesterday that has shown just how bad the economy is at the moment. Apart from the retail sales figures, the US Federal Reserve also reported that industrial production has fallen the most since the days of the Second World War. Also fuelling concern was the news of two banking giants in the US, Citigroup and Bank of America, dropping in share prices as well. Citigroup shares dropped 5.6%, while BoA’s fell by 6.5%. Following on from this, we can only continue to see such figures continue as data reports are released.
U
by BlackBull_Markets
GBP/USD Ends Month High GainsGBP/USD, which had been steadily making sharp moves to the upside in recent days, has now broken that streak to trade lower, with a modest decrease of 0.17% from the previous day’s trading session, now down to 1.2604. If the pair is to continue moving lower, it will meet support at the 1.2460 level. Prior to this the Pound/Dollar pair had been trading at a four week high, reaching 1.2629 Pounds against the US Dollar. These fresh highs came after it was revealed that UK Prime Minister Boris Johnson had left intensive care in hospital and was back at home. However, while this news was initially positive to investors, the revelation that he was not yet fully recovered and would not be back at work for at least another week has cast doubts on the Pound once more. Expectations for the UK economy have also been tempered by UK Chancellor Rishi Sunak admitting that they would be facing tough times economically. The Office for Budget Responsibility, an independent branch of the government used to provide economic forecasts, has said that the UK could face up to 2 million job losses, resulting in a 35% loss in Great Britain’s GDP. However, while Sunak admitted that these figures were troubling, he was still positive that the UK economy can recover “quickly and strongly” after the crisis is over. In the UK, deaths caused by the coronavirus have now risen to over 12,000, even as the country continues its lockdown. Looking ahead, there are still the Brexit talks scheduled between the UK negotiators and the EU. The negotiations had been halted by the coronavirus, but are now set to resume tomorrow. Of course, the Dollar has also been weaker in recent days particularly against the European currencies. On the Dollar Index (DXY), the greenback dropped 0.35%, falling below 100 points. US President Donald Trump has suspended funding to the World Health Organisation, citing accusations of the organisation taking China’s words during the initial outbreak of the pandemic at face value, and blaming them for the spread of the virus. So far the US has given the WHO $893 million in funding, accounting for nearly 15% of the organisation’s funds.
by BlackBull_Markets
1
Gold's Lustre Finally RevealedBack in the beginning of March, I predicted that gold would hit $1,700 by the end of the month. And while it has taken just two weeks longer than that to do so, it has nevertheless reached expectations. Over the past few days gold has hit 7 year highs, and is currently trading above $1,720, showing no signs of stopping. There was a delay in the yellow metal reaching its high and reaffirming its position as the king of safe havens, which was due to factors such as the shortage of physical gold in New York, and the fact that investors were initially selling their assets for liquidity. However, despite all of these factors, the fundamentals were there. Everything was in the right position for gold to be king once more. For one, as risk appetite decreases, the price of gold increases as a result. Times of economic uncertainty are also where gold shines the brightest, and this is one of the most volatile and uncertain times we have seen in a very long time. Another factor stopping gold from rising was the fact that the metal yields no interest, unlike its counterpart, the US Dollar. However, that is no longer a problem anymore, as the US Federal Reserve slashed interest rates for the US Dollar down to 0.25%, effectively meaning that it no longer generates interest either. And with the USD’s advantage against gold neutralised, gold’s safer status has led it to win out. The amount of money the Fed has also promised to pump into the US economy to try and keep it afloat will also be of advantage to gold . Having promised to put as much money into bond purchases as necessary, the Fed will no doubt have to print more money eventually, thus devaluing the dollar as a result. As long as the coronavirus crisis continues to have an economic impact, gold’s strength will only continue. Even as the immediate crisis fades, until the vaccine arrives, people will still have to practice social distancing to the best of their ability, which will cause the global economy severe strain. Even in a post pandemic world, there will be Therefore, gold will most likely only appreciate in value and continue its bullish trajectory. Although it may flatten out soon, it should at least reach $1,800/oz fairly easily before starting to consolidate. Predictions of it reaching $2,000/oz in the next 12-24 months are also looking very solid at this rate.
OANDA:XAUUSD
by BlackBull_Markets
1
AUD Starting to Show Signs of RecoveryIn its latest meeting on Tuesday, the Reserve Bank of Australia decided to leave the interest rate for the Australian Dollar unchanged from its current record low of 0.25%. In a statement, the RBA said that they would not increase the rate until they were confident that the inflation rate would increase at the target rate of 2-3%. As expected, they were concerned about the current economic instability, not only in Australia, but in the rest of the world as well. The RBA’s rate cut mirrors that of the Reserve Banks from other countries during this crisis, namely the US, UK and Canada, which also slashed their interest rates down at around the same time. As a result, its decision to maintain the rate at the current level was also expected, although some countries such as the UK’s Bank of England has since then cut rates even further, down to 0.1%. Australia’s credit rating has also been downgraded by Standard & Poors, down to ‘negative’. Citing a “substantial deterioration” in the nation’s finances, which made the country at a high risk of a deep economic recession, the ratings agency stated that the large amount of economic stimulus packages in order to support the country through COVID-19 would weaken the government’s debt burden substantially. Out of the 11 countries given AAA ratings by S&P, Australia is the first to have had their credit outlook downgraded from stable to negative. It is also expected for S&P to officially lower Australia’s AAA rating within the next two years, depending on how severe the economic damage caused by the coronavirus will turn out to be. Australia has also just recorded its lowest number of new coronavirus cases in three weeks, with only 96 infections for the day. This positive data has affected the Australian Dollar slightly, with the AUD/USD pair trading up marginally for the day. It is currently trading at a high of 0.6245. As the coronavirus infections begin to stabilise across the globe, and risk appetite improves, the Australian Dollar, much like the New Zealand Dollar, is beginning to move upwards as well. The AUD has gained 3.74% over the past week, and looks set to continue its bullish momentum in the coming weeks. A slightly weaker US Dollar will also aid in preventing the Aussie Dollar from making too many sharp movements to the downside.
by BlackBull_Markets
1
NZD Back Down After Two Day Streak Of GainsThe New Zealand Dollar has been relatively stable over the past few days, owing to a lack of major global news. Countries around the world are beginning to stabilise their rate of coronavirus infections, after entering various states of lockdown. Spain, which had been one of the latest countries to be hit hard by an outbreak, has finally reported a decreasing rate of new infections per day. In Wuhan, China, the origin of the virus, the number of new infections per day has finally stopped completely after 11 weeks of lockdown. New Zealand’s efforts to contain the spread of the virus have kept the Kiwi Dollar stable, despite the NZD’s reputation as a riskier currency. New Zealand is currently in its highest level of lockdown, and has been since the 25th of March, where all citizens are required to stay at home except for essential workers. This lockdown is expected to last for a month, although it is uncertain at this stage whether or not the government will consider extending it. However signs at this stage are positive, and it seems that the decision to lock down the country preemptively has paid off. New Zealand’s number of coronavirus cases has also decreased in the last few days, down 4 from yesterday, and 13 the day before. On the previous session NZD rose to a one week high of 0.5975 against the USD, just below 0.6000. These two day gains were made after comments made by the Reserve Bank of New Zealand, which stated that they were open to increasing Quantitative Easing. In an interview, RBNZ Governor Adrian Orr said that the reserve bank would increase monetary stimulus if needed. However on the current session it seems that the Kiwi Dollar has been unable to carry its momentum forward, as it is now trading at 0.5958.Therefore, if it breaks past the resistance turned support line at 0.5925, then the next key support level lies at 0.5830. Another factor influencing the NZD’s current inability to break the 0.60 mark is the fact that the US Dollar’s strength has also continued, with the NFP data of 160,000 lost jobs in March still unable to shake off its momentum. Moving forward, any new updates that may influence the move of the NZD/USD pair will be announcements made by the New Zealand government regarding the current lockdown and when it may end, as well as any new economic packages to be released.
by BlackBull_Markets
1
Pound, Yen Both Poised to DropUK Prime Minister Boris Johnson has now been placed in intensive care, following an admittance to hospital just a few days prior. For now his duties have been taken over by Foreign Secretary Dominic Raab. While a spokesperson from 10 Downing Street has said that Johnson was moved due to his condition worsening, they also stressed that he was still conscious and the move to an intensive care unit was more of a precaution in case he needed a ventilator. This news is undoubtedly weighing heavily on traders as the GBP/USD had an immediate reaction, temporarily dropping down to a low of £1.219 against the US Dollar. Therefore it is also very likely to see the Pound continue to drop, depending on Johnson’s condition in the upcoming days. The GBP/USD pair was stuck in a tight range of 1.2460 – 1.2350, but has finally violated this range on the lower side. It’s now driving selling bias in the GBP/USD pair and may lead it’s prices further lower towards the next support level of 1.2133. – Anish Lal, BlackBull Markets. The Yen’s reputation as a safe haven currency is also under threat, as Japanese Prime Minister Shinzo Abe has announced that he will declare a state of emergency in Tokyo, as well as six other prefectures in Japan, in order to stem the outbreak of coronavirus in their country. This news most likely comes as the result of Tokyo and Osaka gaining an increasing number of new infections which cannot be traced. In an article last week I commented on how there was a sudden rise in cases in Japan following the postponement of the Tokyo 2020 Olympics, and now that figure seems to have risen alarmingly again. For months Japan has had limited COVID-19 cases, avoiding the same situation that other countries have faced. But now the number of cases in the country have crossed 3,500, with 73 deaths. Last week it also seemed that Japan was unwilling to enter lockdown, just as it had been unwilling to postpone the Olympics. Despite growing sentiment from both the public, as well as from senior health officials that major cities should enter lockdown in order to prevent the spread of the virus, Abe had stated that Japan would not enter a state of emergency just yet, even as he acknowledged that the situation would soon mirror Europe’s if they didn’t. I also stated that the Yen’s status as a safe haven would be short lived if Japan were to enact such measures, and it seems now that could be the case more than ever, as the USD/JPY pair has moved up recently, with the Yen losing strength against the greenback. The Yen rose to 109.18 against the Dollar in the previous trading session, but is now back at 108.88, with Abe promising that an 108 trillion Yen economic stimulus package would be delivered to the Japanese economy. This is the equivalent of almost $1 trillion USD. This figure, roughly equal to 20% of Japan’s economic output, was larger than expected and was enough to ease investors’ worries, at least slightly for the time being.
by BlackBull_Markets
1
NFP Release Non-EventOn Friday, the Non farm payroll data was finally released for the month of March. From the 8th-14th March, 701,000 jobs were lost in the United States, far exceeding predictions of 100,000. This is the highest figure of jobs lost in 11 years, and is only the start. The first state to come under lockdown, which was California, only started on the 20th. Therefore it is fully expected that the full consequences of the pandemic will only be truly reflected in subsequent months’ data releases. However despite this massive drop in jobs figures the markets reacted quite little to this news. The Dow Jones lost 3.6% on Friday, with the NASDAQ and S&P 500 both only dropping 1.5% as well. This can be explained in the fact that market sentiment is already extremely negative, and the published figures were more or less expected, as global markets prepare themselves for a recession. Dow futures are currently trading close to 22,000 points. And in contrast, the US Dollar appreciated during all of this, rising to 100.703 points on the Dollar index, a fourth straight day of gains as investors continue to flock to its safety. Prior to this there had been a record of 113 consecutive months of job gains, which has now been wiped out with the biggest loss in jobs since 2009. However, analysts are only anticipating these figures to become worse. Some are even predicting that April’s release could show a loss of 20 million jobs. Released by the Department of Labor Statistics, the Non farm payrolls report is released on the first Friday of each month, and is a collection of various statistics, most importantly the number of people employed within the US, excluding agricultural and seasonal workers. As such it is a strong indication of the US economy, and as a result, the US dollar and stock indices as well. Therefore this release usually draws a lot of attention, with a lot of market movement preceding and immediately following the release as traders try to take advantage of the released data. Just a mere month ago it seemed the US economy’s strength was unstoppable, with stock indices on record bull runs. Last month’s NFP release saw a gain in jobs of 225,000, which had far exceeded predictions of 160,000. And now after just a few weeks of being impacted by the coronavirus markets have become incredibly volatile, and futures look uncertain. Crude Oil has also dipped for the day, following the news that Russia and the OPEC alliance had postponed their meeting to discuss the current ongoing price war between Russia and Saudi Arabia, the de facto leader of the alliance. Last week US President Donald Trump had announced on Twitter that he had talked to the Saudi Arabian Crown Prince Mohammad Bin Salman Al Saud, regarding the oil situation and that he expected the production of oil to drop between 10 to 15 million barrels between the two countries. That news caused WTI crude to spike up an astonishing 24%, and a further 11% the next day, where it peaked at $28/barrel. But now following this crude oil dropped back down to $26.58 per barrel. (Update: Russia has now reported that they are very close to a deal with Saudi Arabia to cut oil production, and that has caused optimism in oil prices once again, returning to a peak of $27.94.)
U
by BlackBull_Markets
Jobless Claims Double AgainThis week’s jobless claims more than doubled last weeks’ record high, reaching 6.648 million. Last week’s figure of 3.28 million jobless claims was already 5 times larger than the previous record of 700,000. And now it has doubled this new figure again. Economists have taken this as a sign that the government stimulus packages are already too late, with more than 10 million Americans having lost their jobs in this month already. Considering the US Labor Force is currently at 164 million, a 10 million combined figure of unemployment claims in the previous 2 weeks would put 6% of the American population without jobs. Added onto that the figure of 3.5% existing unemployment, and this could mean that close to 10% of the entire country is unemployed. These figures are overwhelmingly in recession territory. Even during the global recession of 2008-2009, the number of jobless claims per week only reached 665,000 at its highest. Unfortunately even with the stimulus packages and rate cuts, businesses are laying off their employees en masse, especially in the hospitality and retail sectors, as those have been the hardest hit. Conversely, oil posted its biggest one day gain yet, of 24.67%, after US President Donald Trump made a statement on Twitter that he had spoken to the Saudi Arabia Crown Prince Mohammed bin Salman, after previously promising to speak to Russian President Vladimir Putin, regarding the ongoing price war between the two countries. Trump stated that he expected the two countries to cut back on their oil production by 10, to possibly even 15 million barrels. Immediately after the tweet was made, WTI crude jumped in price from $21.91 to $25.89, almost approaching $26 per barrel. However once the initial excitement faded, it once again fell back down, dropping below $24 at its low. This was most likely due to the fact that investors realised that even with a supply reduction, the demand isn’t high enough to drive prices back up. Of course, some were also doubting the validity of Trump’s tweets, questioning whether or not such a major agreement between the 3 largest oil producers in the world could even come to fruition. The VIX volatility index has also decreased since the middle of the previous month, dropping from a record 82 points down to 50 now. Also known as the “Fear Index”, the VIX is a measurement of the level of expected volatility in the markets for the next 30 days, and is derived from the movement of the S&P 500. Initially moving below 20 points and holding steady, the VIX understandably surged following the global coronavirus pandemic, rising all the way to 82 points as the virus worsened across the world and economies ground to a halt. Despite unprecedented measures taken by Reserve Banks and governments around the world, such as the US Federal Reserve cutting the interest rate for the Dollar by 100 basis points, effectively dropping it 0%, as well as a $2 trillion economic stimulus package approved by the US Senate, volatility across all markets seemed to show no signs of wearing off. However, despite the drop in the VIX, a 50 point volatility forecast still represents a daily price change of around 3.4% for the S&P 500, which then translates to a +/-15% over the period of the month.
TVC:USOIL
by BlackBull_Markets
2
Yen Appreciates for Third DayDespite a drop in the Nikkei 225, Japan’s stock index, the Japanese Yen has seen 3 straight days of gains now against the US Dollar. In contrast, the Nikkei dropped back below 18,000 points, a one week low. Traditionally a very stable currency pair due to both currencies being strong safe havens, USD/JPY was steadily rising in the months leading up to March. However just like every other market, it was not safe from the extreme volatility brought on by the global coronavirus outbreak in March. After dropping all the way below 103, the Dollar eventually rebounded against the Yen to trade at ¥111 to the Dollar, influenced by the rise in strength of the greenback following a pullout from investors from assets back to liquid cash in order to minimise risk. It is currently trading at ¥107 against the greenback. Investors are also looking towards the Yen once again as a safe haven, as it remains a strong currency in times of economic uncertainty, and this is certainly one of them. However, the Yen’s current status may be short-lived, amid growing sentiment that Tokyo may soon come under lockdown due to the sharp increase in coronavirus cases in the city. This new rise comes shortly after the 2020 Tokyo Olympic Games were announced to be postponed until Summer 2021, leading some to question whether or not the Japanese government had been suppressing figures in order to keep the Olympics going ahead. The governor of Tokyo has urged citizens to avoid karaoke- the popular Japanese pastime- in order to maintain social distancing, despite warnings from senior health officials to put the city under lockdown before it is too late. Japan’s economy minister has warned that a lockdown of the country’s biggest cities would have disastrous effects on the Japanese economy. Prime Minister Shinzo Abe has also stated that a state of emergency is not yet needed, but that Japan could enter a situation like Europe very soon. The Dollar also weakened once again following White House officials projecting that around 100,000 to 240,000 more deaths would occur in the United States due to the coronavirus. US President Donald Trump also gave warnings that the coronavirus would continue to worsen, backtracking on his statements from the previous week that he had expected to see the States reopen by Easter. However, he is still resisting calls to issue a nationwide warning to tell Americans to stay home. The Trump Administration’s lack of action has led to State governors to take action of their own. California and New York are continuing to be under lockdown, and an increasing number of states are also extending or adding their own stay at home orders.
by BlackBull_Markets
1
Where Has All The Gold Gone?As covered last week, there is currently a shortage in gold due to the recent high demand. While there is a shortage in gold, it is not the traditional kind of shortage. There is still enough gold, but the problem is that due to the travel restrictions, it is very difficult to actually deliver it into New York, where the COMEX futures are delivered. Of course, investors are currently rushing to gold as a safe haven asset in these extremely volatile times. Historically gold has always been a safe bet as it has been able to retain its value. This was true in the 2008 financial crisis, and it is looking to be true now as well.  Despite a sharp drop in the middle of the month, gold has since rebounded sharply as the US dollar has become weaker again, following an unprecedented rate cut from the US Federal Reserve of 100 basis points, cutting the interest rate to effectively 0%.  As gold does not generate interest either, the key difference between the two assets has become minimised, and gold has only become more attractive again as a result. Therefore, investors are once again putting their bets on gold, causing it to rebound straight back up to $1,650, and currently trading at $1,614/oz.  However, COMEX only accepts one type of gold- the 100 ounce bar. Normally this wouldn’t be a problem, as suppliers would simply ship the British 400 ounce bars to refineries in Asia and Switzerland, and melt them into the COMEX accepted standard before shipping them off to New York. Unfortunately, this is no longer possible either, as affected by the coronavirus pandemic, 3 major Swiss refineries have all shut down. As well as this, flights have been restricted and investors are fearful that their gold could become stuck on these planes.  As a result of this, there is now a 10% premium for physical gold to be delivered. While the trading price for gold is sitting at $1,614, the real price to have actual gold is closer to $1,800/oz. The reason this issue hasn't been reflected in the markets is because most traders simply buy and sell contracts, and not in the actual purchase of gold.  In order to address this issue, CME Group said last Tuesday that it would offer a new contract in which the 400 ounce bars would also be accepted, citing “unprecedented market conditions” as the reason, in order to try mitigate this shortage.  In other news, the black gold, or crude oil, has dropped instead. After reaching an 18-year low, it has rebounded after Presidents Donald Trump and Vladimir Putin reached an agreement to discuss the global oil markets between their top officials. As prices of WTI crude briefly dropped below $20 a barrel, Trump promised to speak with Putin regarding the current price war between Saudi Arabia and Russia.  After the announcement by Saudi Arabia to increase their oil production to 10 million barrels per day, WTI crude immediately dropped below $30 a barrel before consolidating around the $33 mark, but continued to bleed into the 20s as the weeks passed. Fuelled by the coronavirus outbreak, which has stopped planes, trains and automobiles, the demand for oil has dropped, and as a result, so has its price.  While the news that Trump and Putin had spoken caused oil prices to rebound slightly, WTI crude is not out of hot water yet. Global travel restrictions are bound to continue on for several more months, which will undoubtedly affect demand and prices in the months to come.
OANDA:XAUUSD
by BlackBull_Markets
1
US Stocks Set To Reverse As Jobless Claims Break RecordsThis week’s US jobless claims data has hit unprecedented numbers, jumping to 3.28 million. Initial expectations of 1-1.5 million, which was still a very high estimate, were blown out of the water. In response to this news, the Dow Jones Industrial Average, which had been on a resurgence in the past 3 days, is now reversing once again. Over the past few days, the Dow had been able to pull itself out from its bottom of 18,000 points back up to 22,000 due to the passing of the massive $2 trillion coronavirus economic stimulus package in the Senate. But now it is reacting quickly with a flatline and looks to soon plunge again. The NASDAQ and S&P 500 are on similar trajectories. These unemployment figures are the highest ever recorded since the statistic was started back in 1967. For reference, the previous highest figure was 700,000, a number that is 5 times smaller. Some of the more negative predictions are also suggesting that this figure could well enter 12-15 million before the end of the crisis. The jobless claims data is a figure taken by the Department of Labor in the US. These claims refer to the number of people that have filed for unemployment benefits. It is one way to measure the economic state of the country- much like the Non-farm payroll report (NFP). Currently it is estimated that 1 in 3 Americans are unable to work, due to being quarantined. This peak comes as more and more states in the country enter lockdown. Both California and New York, the states with the largest number of cases, have declared a state of emergency, and most other states have issued warnings to stay home as much as possible, with the closure of public areas such as restaurants and cinemas. The US now has 81,000 cases, out of the 500,000 in the world. This makes it now the country with the most number of cases, surpassing China and Italy. The Trump administration has been heavily criticised for its response to the pandemic, with a slow initial response and reluctance to take the virus seriously by introducing stricter measures earlier. Two weeks ago President Trump announced a travel ban from Europe as a means of stopping the virus from entering the States, but the number of cases continued to increase. Many states have become overwhelmed by the number of increasing cases, as they have run out of testing kits, ventilators, and other crucial equipment. Medical staff have also struggled to manage the number of new patients due to the lack of sick beds. In fact, some hospitals have now begun trialing sharing one ventilator between two patients. It was not until the Dow Jones had lost all its gains since Trump’s inauguration that he was forced to conclude as to the severity of the outbreak. But even now, he is pushing for the shutdown to be over by Easter- a deadline which shows he is more concerned about an economic recovery than an nationwide one. Seemingly in response to Trump’s statements, the Chairman of the Federal Reserve Jerome Powell gave a rare TV interview yesterday in which he expressed that it was important to listen to medical experts in terms of setting a timeline for when the States could reopen its borders and resume business as usual. While he stated that the Federal Reserve would spend as much as it takes to support the economy through this crisis, he also stated that it was paramount to contain the spread of the virus before resuming economic activity. This jobs data makes it very clear: we are now in a global recession. Some analysts are already predicting it to be worse than the 2008 financial crisis. The effects of a recession are long lasting. As people lose their jobs, they are unable to spend, forcing businesses to drop their employees, in a cycle that does not stop without government intervention. However, in the case of this crisis, no matter how much money the government pumps into the economy, people are still unable to spend. And that is what is so deadly about this particular recession. Even after the worst is over and businesses will be able to resume operating normally, the economic impacts will still be felt for years to come.
U
by BlackBull_Markets
NZD, AUD Claw Back Up Amid Weakening US DollarThe New Zealand Dollar is fighting it’s way back up as the country enters it’s first official day of nationwide lockdown. It posted a 0.67% gain for the trading day, up to 0.58390 cents against the US Dollar. Just a week ago the NZD had dropped to 0.56, and looked ready to hit the 55 cent mark, as news broke of Air New Zealand’s layoffs. Similar movement can be seen in the AUD, with a meek recovery of 0.47% up to 0.59820 cents. Both currencies have had very similar patterns over the last month, having fallen sharply since the start of the month, and only now starting to recover in the last few days. Both currencies have suffered heavily since the outbreak of the coronavirus epidemic, as they are seen as high risk currencies, and for good reason, given their trading connections to China. They have also been weakened by the strength of the US Dollar, which investors flocked to as a safe haven. The lockdown, which began on Thursday 26 March, is level 4 of the New Zealand government’s strategy to combat COVID-19, the highest level. It involves the shutdown of all non-essential businesses, and the strict restriction of all travel. Citizens are told to stay at home and limit contact with others at all costs. As part of this lockdown, Prime Minister Jacinda Ardern also declared a state of emergency across the entire country on Wednesday, as part of the drastic measures to contain the spread of the virus. While the level 4 measures were originally designed for when the virus could no longer be controlled in the country, the government decided to preemptively enter this stage after 36 new cases were confirmed in one day, in order to contain it as much as possible. The uplift of these currencies can be attributed to the slightly improving global market sentiment, as several countries have all pledged massive and unprecedented amounts of economic stimulus. In the US, the $2 trillion coronavirus bill was passed unanimously in the Senate, after the Democrats and Republicans finally reached an agreement over its contents. It can also be attributed to the halting momentum of the US Dollar. The Dollar Index hit its peak at 102.87 points before coming back down, following 3 year highs. Last week’s rise in the Dollar was mostly attributed to the need for liquid cash as the markets crashed and investors pulled out, as well as to fund their margins. The Dollar Index is currently trading just above 100 points. The markets are also bracing for news on US jobless data, as it will inevitably be extremely negative. Economists are predicting anywhere from 1 million to 1.5 million jobs lost. More than 1 million Californians have already filed for unemployment as the state entered lockdown 6 days ago, as announced by Gavin Newsom, the governor of the state. He also announced yesterday that the restrictions would remain through Easter.
by BlackBull_Markets
1
Nikkei 225 the First to Recover, Gold Facing Historical Shortage The Nikkei 225, or Japanese Stock Index had an 8% gain for the day, following on from its 7% gain from the previous day. Less than a week ago the Nikkei had just hit lows not seen since 2017, falling below 20,000 points. However in just 2 days it has made back its losses and is now rapidly on the rebound back to the 20,000 mark. As well as this, other Asian stocks are on the recovery as well, with the Hong Kong Hang Seng Index, Korean KOSPI, and Shanghai Composite all on the upside. In Europe, the UK FTSE 100 is following suit, with a 2.5% increase for the day. Following on from this, it is reasonable to expect the US stock indices to produce a similar pattern in the upcoming days. US stocks have already started to recover, with the Dow Jones posting its best single day session since 1933, rising 11.4%. This market optimism comes after the US Senate finally agreed on passing the $2 trillion coronavirus bill. The bill, which had been in dispute over the last 2 days due to being blocked by the Democrats, has now been settled with a deal being reached, although the final vote still needs to be made. Although details still need to be agreed upon as well, the gist of the bill is that $250 billion is to go towards directly paying individuals and families, $350 billion on small business loans, and $500 for other companies, amongst others. This is expected to be the largest ever economic stimulus package ever passed. The 2020 Tokyo Olympics have also been officially postponed, after several weeks of discussions. While Japan was originally adamant about the Olympics going ahead despite the alarming growth of the coronavirus pandemic, today they were finally forced to postpone the games until 2021. Japan was initially extremely reluctant to make this move, as it would’ve been the first time in the 124 year history of the modern games that they had to be postponed. Olympic officials said that the games would be postponed to a date before Summer 2021, but no later than that, and that the flame would continue to stay in Japan for the time being. In other news, gold is facing a historic short squeeze, as New York is currently under lockdown. The movement of gold has been severely impeded by the coronavirus, as metal refineries have been forced to close, and all travel has been severely restricted. Normally, in the case of such a shortage in New York, suppliers would ship from overseas locations. But the travel restrictions mean that there is the possibility that the supplies could become trapped, making banks and traders reluctant to do so. Even in other times of economic hardship such as war, gold refineries have not had to close. The price of gold, which had been on the recovery as well this week, has now fallen again, down 1.8% back towards the $1,600 mark after looking like it would reach $1,650. This move could also be attributed to investors discarding the safe haven asset after the announcement of the $2 trillion stimulus package, as risk appetite improved.
INDEX:NKY
by BlackBull_Markets
1