ZFX: Trade war fears! Sharp reversal across financial markets

Weekly Market Review (4/27 – 5/1)

• Last week the June contract of WTI crude futures plunged again, reached nearly $10 mark. However, the market believes that the countries are planning to reopen their economies, supporting the rebound of oil prices. Also, the weekly reports showed a “less than expected” build in US oil inventories, and the data showed that the production cuts of oil-producers have begun, further boosting the oil prices, once above $20 mark.

• The Q1 GDP of the United States dropped by 4.8%, worse than market expectations; the ISM Manufacturing PMI for the US dropped to 41.5 in April, but it was still better than market expectations.

• The Fed kept the rates unchanged as expected but it promised to use full range of tools to support the US economy to tackle considerable risk from the coronavirus pandemic. The ECB also kept the rates unchanged and the Pandemic Emergency Purchase Program remained unchanged at 750 billion euros, but it lowered the rate of targeted longer term refinancing operations (TLTRO).

• The international tension is now a key concern due to Trump’s speech. The global pandemic is likely to trigger more political and economic disputes among the countries, especially another trade war between China and the US after the tariff threats from Trump. The offshore RMB and the other commodity currencies reversed the trend last week as the rising tension turned the “risk off”, triggering investors to re-balance their portfolios.

• The situation of the coronavirus pandemic is showing bad signs again. The number of confirmed cases worldwide has exceeded 3.5 million, nearly 250000 deaths. Russia is now facing a severe outbreak, with over 10000 new cases in a single day.

ZFX analyst Jacob Leung said that, as mentioned last week, the market has shown signs of weakening, and the disputes between China and the US have further intensified the move. Trade war issues were usually very bearish, which will cause shocks in the market. Investors will be very cautious in the coming weeks.

AUD / USD fundamentals or market sentiment – Sentiment changed to risk averse, and the Aussie has dropped significantly.

Support: 0.6380; 0.6350 Resistance: 0.6450; 0.6500

View: The Aussie plummeted and technically the uptrend ended.

Recommendation: wait and see. (Recommendation does not take into account the bid-ask spread factor)

Position follow-up and profit and loss: 0.6500 has been long, first hit the target 0.6520. (Take profit) (Recommendation does not take into account the bid-ask spread factor)

Cumulative profit and loss: 515 pips

EUR / USD fundamentals or market sentiment – ​​the ECB has not made any big moves, and the euro has surged before.

Support: 1.0920; 1.0890 resistance: 1.0970; 1.1000

View: euro break the ranging and tend to be upward.

Recommendation: Go long 1.0920, target 1.0950, stop loss 1.0880. (Recommendation does not take into account the bid-ask spread factor)

Position follow-up and profit and loss: 1.0860 has been short, first hit the target 1.0840. (Take profit) (Recommendation does not take into account the bid-ask spread factor)

Cumulative profit and loss: 445 pips

GBP / USD fundamentals or market sentiment – ​​the currency market was under correction, the euro and pound got support.

Support: 1.2410; 1.2380 Resistance: 1.2480; 1.2500

View: The volatility of the pound became high suddenly.

Recommendation: wait and see. (Recommendation does not take into account the bid-ask spread factor)

Position follow-up and profit and loss: 1.2390 has been short, and the stop loss is 1.2420. (Stopped) 1.2440 has been long, and the stop loss is at 1.2410. (Stopped) (Recommendation does not take into account the bid-ask spread factor)

Cumulative profit and loss: 305 pips

GOLD fundamentals or market sentiment – The gold market is more volatile under a wide ranging.

Support: 1685; 1670 resistance: 1710; 1720

View: The gold price trend may form a $50 ranging.

Recommendation: 1710 short, target 1702, stop loss 1716. (Recommendation does not take into account the bid-ask spread factor)

Position follow-up and profit and loss: 1720 has been short, hit the target 1710. (Take profit) (Recommendation does not take into account the bid-ask spread factor)

Cumulative profit and loss: -17 USD

USOIL (WTI) fundamentals or market sentiment – oil price retraces due to the rising tension between China and the US.

Support: 19.50; 18.50 Resistance: 21.00; 21.70

View: Supported by bullish factors, oil prices may form the bottom.

Recommendation: the OTC quotes of the oil market have big differences, so no recommendation is made.

Position follow-up and profit and loss: —

Cumulative profit and loss: $ 9.8

US30 (Dow) fundamentals or market sentiment – risk off situation, tension between China and the US may reverse the uptrend.

Support: 23400; 23000 Resistance: 23800; 24000

View: The Dow fell sharply, and the outlook was not that optimistic.

Recommendation: 23800 short, target 23500, stop loss 24100. (Pay attention to the OTC quotations may have differences) (Recommendation does not take into account the bid-ask spread factor)

Position follow-up and profit and loss: 24500 has been short, and the stop loss is at 24800. (Stopped) 23900 has been long, and the stop loss is at 23800. (Stopped) (Pay attention to the OTC quotations may have differences) (Recommendation does not take into account the bid-ask spread factor)

Cumulative profit and loss: -200 points

Risk Warning: The above content is for reference only and does not represent ZFX’s position. ZFX does not assume any form of loss caused by any trading operations conducted in accordance with this article. Please be firm in your thinking and do the corresponding risk control.

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