Markets in meltdown
Monday 9 March 2020
Wow, where to start... You probably won't need me to tell you it's been a crazy session in Asia with oil prices tumbling 30+% in the wake of Saudi Arabia, de facto head of OPEC, throwing a challenge to Russia who refused to give up any market share in a direct challenge back to the US oil/shale industry. Saudi then cut prices but the 10% fall we saw in the immediate aftermath then turned into a rout in Asia as the added concerns over falling demand due to Coronavirus fallout kicked in with equities also in rapid decline. Falling demand with increased supply can only result in lower prices.
Throw in to this heady mix the fact that bond yields are still tumbling, Gold jumping, with Yen and Swiss Franc demand in panic mode amid the Coronavirus concerns with USDJPY in flash-crash mode to post 101.51 from Friday's 105.36 closing levels, a move that also prompted an AUD crash as AUDJPY fell to 64.25 with AUDUSD down to 0.6311 before rebounding to 67.64 and 0.6577. The Russian rouble has fallen over 7% amid the overall chaos with other EM currencies such as the SA Rand on the run too.
European equity markets have continued to fall but showing some pause for thought as I type. No, of course I didn't forsee such dramatic moves but we can never rule anything out and I have been warning of this very fragile global house of cards for a long while. I hope the cautious steer has at least helped save you some money.
So where from here today/this week? Order boards are understandably sketchy and there are many gaps to fill that might help keep prices contained for a while but we must assume nothing and expect everything. ECB meet and pronounce on Thursday but we have the UK Budget statement along with a raft of data before that on Wednesday to mark in your diaries. I will offer more thoughts on both closer to the time.
GBPUSD has tested 1.3200 on the weaker USD but rallies tempered as ever by the GBPJPY and GBPCHF supply. Having said that GBPAUD has been up through 2.00 and GBPCAD 1.8000 as commodity currencies continue to take a hit as I have been warning. We should expect some decent demand in the dips all the way down to 1.3050.EURGBP posted highs of 0.8776 (GBPEUR down to 1.1394) as EURUSD led the way up on core pairs but with growing belief that Wednesday's UK Budget will provide great swathes of fiscal-led growth ( a view I do not share btw) we've seen GBPUSD play catch-up and EURGBP back down to 0.8640. GBPJPY continues it downward journey posting lows of 132.80 before bouncing to 134.80.
I stay poised to sell GBP rallies and buy back in the dips as ever but caution advised.
USDJPY tumbled to look at 101.50 in Asia but has since steadied a little to post 102.70 as I type. The BOJ have been verbally active as expected and threatening a raft of measures but unlikely to be buying any USDJPY still just yet. We never say never though in FX.EURJPY also in retreat to post 116.16 but still tempered a little by the EURUSD rally.EURUSD has rallied to test 1.1500 but since fallen back to 1.1367 amid this morning's general correction. USDCHF has been down to 0.9179 dragging EURCHF down to 1.0542 but some expected dip demand again and now testing the 1.0600 area again as I type with the SNB ever poised.
AUDUSD flash-crashed to 0.6311 amid the AUDJPY crash but has rallied to look at 0.6600 (650m in expiries today) but still tempered by some AUDJPY rally supply as USDJPY finds sellers above 102.75. USDCAD posted 1.3778 highs on the oil price crash and CADJPY supply but now back below 1.3600 amid the general correction/reality check as oil rallies.
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.
On Saturday the mighty young Shrimpers of Southend finally got their just reward for some spirited performaces of late to run out deserved 3-1 winners and bring some much needed cheer back to the Hall. England's rugby boys made it a doubly satisfying sporting weekend.
Have a good day/week out there one and all. Let's be careful out there.
Interbank rates: 08.12 GMT
GBPZAR 20.9779 (22.3361 Highs in Asia)
USDZAR 15.9653 (17.0783 Highs)