ZFX: Risk appetite returns? Hopes for reopening of US economy
Review: the market was expecting the US will soon reopen the economy
On Tuesday (April 14), optimism continued as the market was expecting the US will soon reopen the economy, and the coronavirus outbreak in Europe showed signs of easing. The news boosted the investor confidence, driving the Wall Street three major indexes all rose, of which the Nasdaq continued to rise strongly by nearly 4%, a four consecutive trading days rally.
After the holidays, as oil prices continued to slump, which the WTI crude futures fell more than 10% on Tuesday, reached the day low $19.95, the sentiment once turns to a bit risk averse. Investors generally believe that even if OPEC+ and other major oil-producers have made the agreement of production cut, it will be still difficult for offsetting the decline in crude oil demand due to the global pandemic.
The drop of the oil prices has made the market became cautious. But, the White House economic adviser Kudlow revealed that President Trump will likely issue guidelines for reopening economy within two days, which stimulated market sentiment again.
ZFX analyst Jacob Leung said that the overall views on the outbreak are still relatively cautious, as more than 210 countries worldwide have already approached 2 million confirmed cases. However, whenever there is good news, in the short term, one of the market normal practices is to magnify bullish factors and ignore those negative factors.
The International Monetary Fund (IMF) has predicted that the new coronavirus pandemic will surely cause a global economic recession this year, and the global economy will shrink by 3%. The performance will be the worst since the Great Depression of the 1930s, and no country will be immune.
ZFX analyst Jacob Leung said that in the second quarter, it is alert to pay more attention to the financial market conditions, which the subsequent impacts caused by the global outbreak will emerge more and more specifically, including unemployment problems, corporate debt problems or bank credit losses.
Of course, the stimulus policies all around the world may make the market conditions even more variable. It should be noted that the Fed has launched several packages, releasing huge amount of funds. The liquidity problem earlier in the market has been alleviated. ZFX analyst Jacob Leung said that once opportunities come in the market, “hot money” will be released to bid those risky assets. It is observed that the recent drop of the dollar has generally supported the market sentiment.
AUD/USD Market theme / sentiment: The dollar is weak, the stock market continues to improve, and the Aussie is stable.
Support: 0.6400; 0.6375 Resistance: 0.6450; 0.6500
Recommendation: 0.6390 short, target 0.6375, stop loss 0.6400. (Recommendation does not take into account the bid-ask spread factor)
Position follow-up and profit and loss: 0.6380 has been short, and the stop loss is 0.6400. (Stop Loss) (Recommendation does not take into account the bid-ask spread factor)
Cumulative profit and loss: 535 pips
EUR/USD Market theme / sentiment: Europe’s outbreak slows down and the euro rose slightly.
Support: 1.0950; 1.0930 Resistance: 1.0990; 1.1050
Recommendation: short 1.0980, target 1.0960, stop loss 1.1000. (Recommendation does not take into account the bid-ask spread factor)
Position follow-up and profit and loss: 1.0970 is short, the target is changed to 1.0960, and the stop loss is 1.1000. (Hold) (Recommendation does not take into account the bid-ask spread factor)
Cumulative profit and loss: 400 pips
GBP/USD Market theme / sentiment: market sentiment has not changed much, and the pound has maintained its upward trend.
Support: 1.2570; 1.2500 Resistance: 1.2650; 1.2700
Recommendation: 1.2595 short, target 1.2570, stop loss 1.2620. (Recommendation does not take into account the bid-ask spread factor)
Position follow-up and profit and loss: — (Recommendation does not take into account the bid-ask spread factor)
Cumulative profit and loss: 290 pips
GOLD Market theme / sentiment: Gold prices keep rally, hot money factors continue to be positive to gold market.
Support: 1710; 1700 resistance: 1730; 1740
Recommendation: 1712 long, target 1720, stop loss 1704. (Recommendation does not take into account the bid-ask spread factor)
Position follow-up and profit and loss: long 1696, target 1705, stop loss 1687. (cancelled) (Recommendation does not take into account the bid-ask spread factor)
Cumulative profit and loss: -54 USD
USOIL Market theme / sentiment: Production cut failed to boost oil prices.
Support: 26.50; 25.00 Resistance: 27.80; 28.50
Recommendation: At present, there is a big difference in OTC quotes and no recommendations are made.
Position follow-up and profit and loss: —
Cumulative profit and loss: $ 9.8
US30 Market theme / sentiment: Bullish and bearish factors are mixed, the Dow is under pressure at 24000.
Support: 23600; 23200 Resistance: 24000; 24500
Recommendation: wait and see.
Position follow-up and profit and loss: 23300 short, not reached, change to 23550 short, target 23200, stop loss 23800. (Pending) (Pay attention to the OTC quotes will have differences)
Cumulative profit and loss: —
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.