FOREX TRADING STRATEGY JUN 16 - DIFFICULT CHOICES

Jun 16, 2020
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There are many things happening that can affect the markets greatly. That's why we have to catch up with them in order to apply the appropriate forex trading strategies.

FED is buying bonds

Yesterday, the Federal Reserve said it would start buying corporate bonds under its Secondary Market Corporate Credit Facility - an emergency lending program that has so far only purchased ETF funds. For the first time, the Fed also said how it plans to implement its buying strategy, saying it will create an index that follows many of the U.S. corporate bond markets.

According to the Fed, this index is made up of all bonds on the secondary market that were issued by U.S. businesses, meeting the bond's minimum rating, maximum maturity, and criteria. other. The creation of the index has removed a potential barrier for companies that they will have to certify themselves to comply with the restrictions stated for the program, and this has caused excitement for investors.

Uplifting markets

Asian stocks will start to trade stronger on Tuesday following the Fed announcement, which eased concerns about the second wave of pandemic and helped US stocks recover. The dollar fell against its peers. Futures market in Japan, Australia and Hong Kong all increased. The S&P 500 index rose 0.8% at the close after moving from a 2.5% decline to a 1.3% increase. Oil prices rebounded to $37/barrel after falling below $35/barrel amid improving demand and declining production. Treasury bonds fell.

Trump and China

Recently, Donald Trump has frequently said that China is backing Joe Biden in the US presidential election in November this year. In Beijing, however, officials are coming up with the idea of ​​Trump's next four-year term. Interviews with nine officials and former officials show a psychological transformation in favor of the president, although he has spent much of the past four years blaming Beijing for everything, from US trade imbalance to Covid-19. So what is the main reason? China believes that the erosion of the US network after the election will be greater than any damage to China, from trade disputes to continuous geopolitical instability. Zhou Xiaoming, former Chinese trade negotiator and former deputy representative in Geneva, said: "If Mr. Biden was elected president, I think this could be more dangerous for China, because he Biden will work with allies to target China, while Mr. Trump is destroying US alliances."

Difficult choices

One of Hong Kong's toughest years in decades is causing many foreigners to struggle again with the question: Should they stay or go? If they stay, they face new disruptions, arising from political instability as China tries to impose new national security laws on Hong Kong. If they leave, they risk moving at a time when the global economy is crippled by coronaviruses. After overcoming a year of trade tensions between the United States and China, anti-government protests and the worst virus outbreak since the 2003 SARS crisis, one division is inclined to the second choice.