ZFX: Bleak figures! Risk aversion returned
Wednesday (April 15) review
– A series of poor economic figures released by the United States has triggered the investor fears about the global economic situation. The risk aversion returned on Wednesday, and the greenback jumped to near 100 level, causing that the three major Wall Street indexes all fell by more than 1%, with the S&P 500 falling by more than 2%.
– Almost all US figures missed expectations on Wednesday, dampening market sentiment. U.S. retail sales in March fell 8.7% monthly; NY Fed Empire State Manufacturing Index recorded -78.2 in April; U.S. manufacturing production fell 6.3% in March; U.S. industrial production fell 5.4% in March; the NAHB housing market index recorded only 30 in April.
– The Federal Reserve’s Beige Book showed that economic activity has contracted sharply in all regions, and US companies have been severely hit by the coronavirus outbreak. The most serious industries include leisure, hospitality sector and retail sector apart from essentials. Companies in most regions expect that the situation in the next few months will deteriorate further.
– Oil prices continue to slump, dragging down the weak market conditions. Last week, U.S. crude oil stockpiles rose by over 19 million barrels, said by the US EIA, the biggest weekly increase in history. Also, crude oil stockpiles rose by 13.1 million barrels last week, the API said earlier. Both figures were larger than expected, and the WTI crude futures once again made the 18-years low of $19.2. However, it is reported that the United States will subsidize oil companies to encourage production cuts, and the news eased the downtrend of oil prices.
– For the global pandemic, the number of confirmed cases all around the world has exceeded 2 million already, causing more than 130000 death. However, the outbreak situation in some countries has begun to to slow its spread. Among them, countries such as Spain and Finland have started to release their lockdown measures, while the UK said that the outbreak has approached its peak. In the US, Trump pointed out that “the peak has passed” and he will instruct the restart of the economy.
ZFX analyst Jacob Leung said that even if the market expected the US will soon restart the economy, but as mentioned earlier, investors will still need to back to the reality, which is the subsequent impact of the global outbreak. In addition, oil prices will continue to be under pressure, that would be one of the big focus in the market. It is not ruled out that oil prices may hover at a very low level for several weeks, which will hit the market sentiment.
AUD/USD
AUD / USD fundamentals or market sentiment – Commodity currencies are worse off in risk aversion.
Support: 0.6270; 0.6230 Resistance: 0.6310; 0.6340
View: The Aussie may turn bearish.
Recommendation: 0.6310 short, target 0.6270, stop loss 0.6350. (Recommendation does not take into account the bid-ask spread factor)
Position follow-up and profit and loss: 0.6390 has been short, and the target is 0.6375. (Take profit) (recommendation does not consider the bid-ask spread factor)
Cumulative profit and loss: 550 pips
EUR/USD
EUR / USD fundamentals or market sentiment – Strong dollar obviously hit the Euro.
Support: 1.0850; 1.0800 Resistance: 1.0910; 1.0940
View: Sharp decline of the Euro made the outlook becoming bearish.
Recommendation: Short at 1.0900, target 1.0870, stop loss at 1.0920. (Recommendation does not take into account the bid-ask spread factor)
Position follow-up and profit and loss: 1.0970 has been short, and the target hit 1.0960. (Take profit) 1.0980 short, target 1.0960, stop loss 1.1000. (Cancelled) (Recommendation does not take into account the bid-ask spread factor)
Cumulative profit and loss: 410 pips
GBP/USD
GBP / USD fundamentals or market sentiment – With the strengthening of the dollar, the correction for the uptrend GBP is under greater pressure.
Support: 1.2430; 1.2350 Resistance: 1.2520; 1.2550
View: GBP correction is rapid, imply the rally may come to an end.
Recommendation: 1.2520 short, target 1.2480, stop loss 1.2560. (Recommendation does not take into account the bid-ask spread factor)
Position follow-up and profit and loss: 1.2595 has been short, hit the target 1.2570. (Take profit) (Recommendation does not take into account the bid-ask spread factor)
Cumulative profit and loss: 315 pips
GOLD
GOLD fundamentals or market sentiment – the strong dollar suppressed the strong gold market
Support: 1705; 1690 resistance: 1725; 1740
View: The correction was expected, but now likely to be a “head and shoulders”.
Recommendation: 1705 short, target 1695, stop loss 1715. (Recommendation does not take into account the bid-ask spread factor)
Position follow-up and profit and loss: 1712 has been long, with a target of 1720. (Take profit) (Recommendation does not take into account the bid-ask spread factor)
Cumulative profit and loss: -46 USD
USOIL (WTI)
USOIL (U.S. crude oil) fundamentals or market sentiment – production cut agreement still has no support to the oil prices
Support: 26.00; 25.50 Resistance: 27.00; 28.50
View: The oil prices may test the low further, under a gloomy outlook.
Recommendation: At present, the OTC quotes of the oil market have big differences, no recommendation is made.
Position follow-up and profit and loss: —
Cumulative profit and loss: $ 9.8
US30 (DOW)
US30 (Dow) fundamentals or market sentiment: Poor performance of figures and corporate earnings, investors seek safety
Support: 23200; 23000 Resistance: 23600; 24000
View: the Dow may test further lower.
Recommendation: 23500 short, target 23350, stop loss 23650. (Pay attention to the OTC quote may have differences) (Recommendation does not take into account the bid-ask spread factor)
Position follow-up and profit and loss: 23550 has been short, hit the target 23200. (Take profit) (Pay attention to the OTC quote may have differences) (Recommendation does not take into account the bid-ask spread factor)
Cumulative profit and loss: 350 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.