ZFX: Emergency! Financial market keeps making history
Review:
Last Friday (March 13), US President Trump declared a state of emergency to respond to the coronavirus pandemic. The US government will prepare $50 billion fund to deal with the epidemic. He also said that 500,000 sets of virus detection reagents will be launched that inspiring the whole market sentiment. The three major Wall Street indexes closed near the day high, all rose more than 9%,the best daily performance since the financial crisis in 2008.
After the worst day since the stock market crash in 1987, the market regained confidence in a panic as a result of the stimulus measures introduced by central banks and financial regulators in many countries. Last Friday, the Bank of Canada unexpectedly announced an emergency interest rate cut of 0.5%, which is the second rate cut within 9 days.
This week, surprises continued. On Monday morning session, the Federal Reserve announced the emergency rate cut again. The Fed rate was lowered from 1% -1.25% to 0% -0.25% level, and quantitative easing (QE) of US$ 700 billion will be implemented. The Reserve Bank of New Zealand also cut interest rates by 0.75% to 0.25% today, a record low following an emergency meeting. The Reserve Bank of Australia once again injected huge amount of funds into the financial system to cope with the tight liquidity caused by the global market sell-off. The Bank of Japan also joined, meeting earlier for emergency.
This morning, the dollar fell sharply, and the gold price gapped after the market open, hit near $1575.
As the global economy is under a frozen condition, it is generally expected that a big recession will soon happen and last for at least a quarter. ZFX analyst Jacob Leung said that, all the central banks are talking about emergency in response to the impact of the new coronavirus. However, the more emergency measures, the more worry from the investors.
The direction of financial markets remains uncertain. In early trading session on Monday, the Dow futures was still trading 1000 points lower, reflecting how pessimistic the market is . The stock markets in the Asia-Pacific region were generally weak.
AUD/USD
Market theme / sentiment: The Australian dollar still weak as people expect the RBA measures.
Support level: 0.6100; 0.6080 Resistance level: 0.6200; 0.6250
Recommendations: 0.6100 long, target 0.6150, stop loss 0.6070. (It is recommended not to consider the bid-ask spread factor)
Position follow-up and profit and loss: 0.6305 has been long, and the stop loss is at 0.6260. (Stop Loss) (It is recommended not to consider the bid-ask spread factor)
Cumulative profit and loss: 345 pips
EUR/USD
Market theme / sentiment: The European Central Bank did not take any major action, and the euro fell mildly.
Support level: 1.1100; 1.1050 Resistance level: 1.1150; 1.1170
Recommendation: 1.1150 short, target 1.1120, stop loss 1.1180. (It is recommended not to consider the bid-ask spread factor)
Position follow-up and profit and loss: 1.1220 has been shorted, with a target of 1.1180. (TP) (It is recommended not to consider the bid-ask spread factor)
Cumulative profit and loss: 415 pips
GBP/USD
Market theme / sentiment: The non-US currencies continued to fall, and the pound fell another 300 pips.
Support levels: 1.2300; 1.2250 Resistance levels: 1.2400; 1.2450
Recommendation: Go long at 1.2360, target 1.2400, stop loss 1.2320. (It is recommended not to consider the bid-ask spread factor)
Position follow-up and profit and loss: 1.2560 has been long, with a target of 1.2590. (TP) (It is recommended not to consider the bid-ask spread factor)
Cumulative profit and loss: 370 pips
GOLD
Market theme / sentiment: Risk aversion is no longer a bullish factor for the gold market.
Support level: 1530; 1510 Resistance level: 1560; 1570
Recommendation: wait and see. (It is recommended not to consider the bid-ask spread factor)
Position follow-up and profit and loss: 1560 has been shorted and the stop loss is at 1575. (Stop Loss) (If it is a stop sell, then profit) (It is recommended not to consider the bid-ask spread factor)
Cumulative profit and loss: -121 USD
USOIL(美国原油)
Market theme / sentiment: Global policies can support the oil prices a bit.
Support levels: 31.00; 30.50 Resistance levels: 32.00; 32.50
Recommendation: 32 shorts, target 31.5, stop loss 32.3. (It is recommended not to consider the bid-ask spread factor)
Position follow-up and profit and loss: 32.1 has long and hit target 32.9. (TP) (It is recommended not to consider the bid-ask spread factor)
Cumulative profit and loss: $ 9.9
Risk Warning: The above content is for reference only, and does not represent ZFX’s position. ZFX is not responsible for any form of loss caused by any trading operations conducted in accordance with this article. Please be firm in your thinking and take appropriate risk control.