European Union Closes Border to All Foreigners
- 23 March 2020
MARKET OBSERVATIONS – 23 Mar 2020
European Union Closes Border to All Foreigners
Fundamental Outlook The U.S. President Trump signs a bill to pass USD100 billion aid program to fight the coronavirus outbreak. Meanwhile, the congress is working on a new fiscal stimulus package of USD 1 trillion to help avoid the calamity of pandemic outbreak.
The U.S. FED extends the asset purchase including municipal bonds. Till date, more than 17,000 cases have been reported for coronavirus in the country. Canada PM Justin Trudeau has also announced closing the border to foreigners with major exception to U.S. citizens. Dow benchmark fell 913 points at closing on Friday in another harrowing week amid covid-19 spread.
The European Central Bank will deploy EUR750 billion for an emergency purchase program till end 2020 to help support securities in market.
The European Union has closed its border to all foreigner travellers except the citizens from 27 member countries. Death toll in Italy has exceeded China above 3,400 people on last Friday.
Bank of England cuts 15 basis point in benchmark rate to 0.1 percent and increase the bond-buying program to GBP645 billion. The British PM announces nationwide lockdown measures and says the pandemic will be contained after 3 weeks.
Saudi Arabia Government announces USD32 billion in emergency fund to aid the economy for fighting against coronavirus spread and plunging oil prices. So far, oil prices have fallen 60 percent this year.
During last mid-week, WTI Crude prices fell to 18-year low at almost USD20 /barrel after demand for energy plummets. The U.S. Dollar Index (USDX) has surged to 103.50 region and challenges the high created in January 2017.
Technical Forecast USD/JPY surged more than 500 pips last week and settled at 110.80 area on Friday. Market jumped rapidly as there was a shortage of Dollar liquidity after European central banks cut rates. This week, we foresee the market will stay toppish and swing from 109.00 – 112.00 region. Beware of breaking beneath 109.00 support that will initiate another rapid fall!
EUR/USD swung like a roller-coaster from a 12-month high to an almost 3-year low last week. The trend is extremely unexpected as Dollar flies. This week, we expect the support to emerge at 1.0550 region before a strong rebound. Technical range will be contained initially from 1.0500 – 1.0800 region but piercing above this resistance will skyrocket again into an unprecedented momentum.
GBP/USD hit 1.1409 low and proved the major support at 1.400 level. This week, the trend will be choppy and whipsaw from 1.1400 – 1.1900 range in erratic swings. After U.K. executed the BREXIT and meets the covid-19 outbreak, it will be a great challenge for the British Government to fight the recession without the support of EU. Hence, traders are advised to exercise caution in risk control.
Gold prices have been swinging last week as Dollar rose. This week, we reckon the trend will probably make another dip at USD1460 /oz before recovery. Overall range is expected to be wild but contain within USD1450 – USD1550 /oz region. Taking a forward view into the market, we predict this will be a good time to catch the downside entry into yellow metal for a mid-term position.
WTI Crude prices are trading on downside as more traders are derailing away from the market. Technically, we project the trend will be constricted from USD20 – USD28 /barrel in coming weeks without a breakthrough. Literally, the oil market is losing its shine and oil-producing countries are naturally losing its revenue as the prices fall. Beware of the prices breakout beyond the aforementioned range.
Silver prices have reversed after taking a dip beneath USD12.00 /oz level. The market has returned to the crisis low of April 2009 and ideal for a long-term position. This week, it will be a good bargain in case the prices fall below USD12.00 /oz again. Topside is temporarily limited to USD13.50 /oz for quick short-term exit strategy.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded sideways last week in mixed sentiment after the rollover month. Weaker Ringgit has not helped the spike FCPO exports as global recession slips into market. The USD/MYR has broken above RM4.30 level and trades at RM4.42 region currently. Jun20 Futures contract settled at RM22048 /MT on Friday. This week, we target the range to be contained from RM2200 – RM2350 /MT until we see a breakthrough beyond this range.
DAR Wong has 30 years of trading and hedging experiences in global financial markets. The opinion is solely at his own. He can be reached at firstname.lastname@example.org