FOREX TRADING STRATEGY APR 29 - LATEST UPDATES

Apr 29, 2020
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Today we look at the latest updates on the world conditions to find out what forex trading strategies we should apply.

Outbreak around the world

According to data compiled by Johns Hopkins University, the number of coronavirus infections in the United States has exceeded 1 million. New York City reported a decline in new coronavirus hospital admissions, while state governor Andrew Cuomo set out necessary criteria for some suburban areas to reopen. Singapore is multiplying health facilities when the number of virus infections reaches nearly 15,000, making the country the third worst infected country in Asia, after China and India.

France plans to start reopening stores on May 11, while Spain is preparing for a "new normal" life because the most heavily affected European country has been eliminated. Restrictions for the next 8 weeks. The number of new infections in Germany for the first time fell below 1,000 cases in more than 5 years. In another development, top Chinese scientists said the virus would not be eradicated, leading many to believe that the pathogen could return in more waves.

Chaotic market

Asian stocks were poised for a chaotic start on Wednesday after a volatile trading session in the United States saw stock slump and Treasury bonds climb as consumers lost confidence as well. More companies lower their earnings forecast. The dollar weakens. The Hong Kong futures market fell, while the Australian market increased and Japan closed for a holiday. The Nasdaq Composite Index has risen for two consecutive days, but was dragged down by shares of Facebook, Amazon.com and Netflix as data showed U.S. consumer confidence in April fell to its lowest level ever since 2014. Meanwhile, the US oil market is boiling when investors guarantee short-term contracts for fear of negative prices.

Singapore down

All three of Singapore's banks are expected to see profits decline for the first time since 2016 when they have cash reserves for a spike in NPLs, stemming from the coronavirus recession. The net profit of each lending bank may decrease from 21% to 28% in the 3 months ending on March 31 compared to the same period last year. DBS Group Holdings Ltd., the nation's largest bank, may have the highest drop in profits when it begins to publish earnings reports on Thursday; while Oversea-Chinese Banking Corp. (OCBC) is forecast to report the smallest decline. The pain for lenders in Singapore will persist as the city experiences a sharp economic slowdown this year because the pandemic has crippled production, tourism and other services. Banks are also facing interest rate declines and slowing loan growth. At the same time, the collapse of oil prices could cause local companies to serve the energy industry to default. OCBC and United Overseas Bank Ltd. will publish earnings reports next week.

A trap

When dividends were cut worldwide, the $42 billion payment promised by China's largest banks had a powerful defender behind it - the Communist Party. Industrial and Commercial Bank of China and the three largest banks are paying more than 30% of profits in 2019 to shareholders, implying an average dividend rate of more than 6%. This is almost double what their competitors pay in the US. But with banks facing trillions of yuan in credit lost from the coronavirus collapse, there has been debate over whether major Chinese lenders should maintain their payments to keep investors, especially their government owners, satisfied with their increasingly weak power costs. Banks in the United States and Denmark, meanwhile, have removed their dividends to meet demand from regulators, while payments in Switzerland and Australia were blocked as the watchdog encouraged. Lending banks should preserve their capital.

Tension growing

Tensions are growing between Australia and China after Canberra called for an independent investigation into the origin of the coronavirus pandemic, confusing businesses in China's most dependent economy in China. Even as Australia prepared for its first recession in nearly three decades, Foreign Minister Marise Payne said an independent court had the same powers as UN inspectors should be allowed to enter Wuhan, where the disease first broke out late last year. 

She also called for an independent review of how China and the World Health Organization handled the early stages of the pandemic. Australia has also called for an end to the wildlife sale at the so-called wet market, one of the first places in Wuhan to detect the virus. The move comes with a risk: China remains Australia's largest export destination, with iron ore, coal and food sales at the center of the 213 billion-dollar trade relationship.