US Dollar Gains, Crude Oil Sinks, Dow Jones Repeats 2008 Despite Stimulus Wave
It was another tumultuous week in global stock markets. The S&P 500, DAX and Nikkei 225 all suffered another dismal 5-day performance that last matched declines witnessed during the 2008 financial crisis. The coronavirus outbreak and stringent measures governments are taking to promote social isolation are placing global growth increasingly at risk
Demand for preserving capital benefited the haven-linked US Dollar as it even outpaced the anti-risk Japanese Yen. EUR/USD, GBP/USD and AUD/USD fell. Sentiment-linked crude oil prices dropped as WTI fell almost 30% this past week. Gold prices declined once more as the yellow metal struggled to match the liquidity that the Greenback offers as the world’s reserve currency.
Monetary policy may continue heading into uncharted territory after a week of coordinated global moves. Central banks such as the Fed, ECB, BoE, RBA and RBNZ kept slashing what little was left in lowering rates in the first place. Most took unconventional policy measures to help the flow of capital in these uncertain times.
It is unclear if equities have found a bottom with COVID-19 spreading faster outside of China, particularly in Europe and the United States creeping upward. Unemployment claims in the world’s largest economy surged at their fastest pace since 2012. More dismal readings may come in the weeks and perhaps months ahead with states and counties attempting to curb travel.
All eyes in the week ahead turn to more fiscal measures, particularly as Congress debates stimulus checks. The G-7 Foreign Ministers Summit will also be eyed for perhaps more coordinated commitment. Preliminary gauges of U.S. business activity for March will show an idea of the gravity of the situation. This is as consumer sentiment crosses the wires on Friday.
The US Dollar has soared as capital spooked by the coronavirus outbreak flooded out of global financial markets and into the most liquid cash on offer. More of the same seems likely.
Last Wednesday’s launch of a €750 billion emergency asset-purchase program by the European Central Bank did little to stabilize the Euro, suggesting further EUR/USD losses are likely in the week ahead.
The Australian Dollar faces a lack of scheduled economic or central bank news this week. That’s not likely to be good news for its remaining bulls.
Gold prices may continue to fall if recession fears from the coronavirus overwhelm the optimism from stimulatory measures by central banks and governments around the world.
Global equity markets swung wildly last week as declines slowed in the latter half. With a material pullback in volatility, can risk appetite improve in the week ahead?
The price of oil may stage a larger recovery over the coming days as the Relative Strength Index (RSI) is on the cusp of flashing a textbook buy signal.
Gold has traded in $250/oz. range in the last 11 days, sending volatility to multi-year extremes. Traders should factor this in when looking at entry and exit levels.
USD/CAD saw some more strength last week before weakening a bit; a pullback may be short-loved as the broader trend higher is pointed up.
The euro got hit hard last week, now flirting with a 20-year trend-line break that could take it to parity, if not worse.
Another week of losses for global equities amid a global recession repricing. DAX looks to 2016 lows, while FTSE 100 eyes 5000 break.
Sterling plummeted to multi-decade lows as the Coronavirus global pandemic fuels dollar demand. Here are the levels that matter on the GBP/USD weekly technical chart.
The wild volatility continued across global markets and the Japanese Yen remains in the cross-hairs in a number of currency pairs.
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