Markets in a whirl again after concerted intervention move
Monday 16 March 2020
Yesterday we saw co-ordinated intervention from the US Federal Reserve, BOC, BOE, BOJ, ECB, and the SNB who announced a coordinated action to "enhance the provision of liquidity via the standing U.S. dollar liquidity swap line arrangements.These central banks have agreed to lower the pricing on the standing U.S. dollar liquidity swap arrangements by 25 basis points". The RBNZ have slashed OCR by 0.75bp to 0.25% and the RBA have stated they will announce QE measures this Thursday.
Said the Fed "The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook. In light of these developments, the Committee decided to lower the target range for the federal funds rate to 0 to 1/4 percent. The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals".
So many unknowns before and after these extreme measures and outside of the financial markets we've seen further lockdowns across Europe and now in NYC and LA. As for the UK it seems likely that the Government will introduce further restrictions on movement this week after delaying the process thus far on medical advice but those over 70 have already been told to self-quarantine and a ban on mass gatherings is also expected.
In the immediate aftermath we saw the Greenback open sharply lower in Asia but since been on a rollercoaster ride amid variable risk (mostly soggy still though far after Friday's sharp correction higher for equity markets) and the jury's verdict, including my own, is well and truly out. Equity and oil markets falling again as European trading gets underway.
There is no crystal ball anywhere that can tell us what will unfold. My 40 years in FX gives me some insight into how these volatile markets might behave moving forward, and I will certainly help where I can to guide you, but I will state quite clearly that as far as the global picture and where Coronavirus takes us is concerned we live in unprecdented times and I am second-guessing as much as the next person. One thing I can state quite clearly is that a cool head is needed along with increased discipline and caution. If you have specific questions thewn do let me have them.
GBPUSD has been down to test 1.2250 with GBPJPY and GBPCHF supply helping to push it down along with another surge higher in EURGBP but has since been back up to 1.2430-35 amid the general USD supply before testing 1.2300 again as I type. EURGBP has now rallied further to post 0.9114 (GBPEUR down to 1.0965).GBPJPY has fallen further to test 130.80 before bouncing but sellers poised.
I will continue to sell GBP rallies as ever.
USDJPY rallied strongly on Friday amid some general Greenbck grabbing and better risk (all relative ofc right now) but gapped lower in Asia to post 105.72 but since rallied only to cap around 107.50 before retreating again to post 106.00 as I type.EURJPY has been up above 120.00 but since back to look at 118.00 as risk sentiment fades.EURUSD has been down to test the 1.1060 support but now back up to 1.1235 as the Euro finds itself in a funding currency roll again and with the ECB having limited room to liquidity as we clearly saw last week and of which I warned prior to the ECB meeting.USDCHF currently on its lows at 0.9393 as EURUSD rallies and EURCHF to hold that seemingly SNB line in the sand at 1.0540 that I've been highlighting ( and now others on Twitter have too).
AUDUSD tumbled to 0.6095 amid the general carnage and the RBA QE announcement but now rallying amid the general USD supply to post 0.6165. USDCAD has been up on its own rollercoaster ride again amid the variable risk/oil price and USD triple whammy with lows of 1.3730 and highs of 1.3995.
Fickle Forex markets ever prevailing so be ready to jump on moves with your entry/exit levels and orders as always. Caution advised as ever if you're not sure.
Lots going on right now, and the foreseeable future, so don't forget that I offer 1-2-1 mentoring if there's areas of trading these volatile markets or how to make best use of the order boards and expiries, that you might need some further help with.
Let's be careful out there one and all. Staying safe must be our main priority.
Interbank rates: 08.10 GMT