Mar 16 2020 0
We are definitely facing a depression in the economy around the world. Our job is to watch the moves of the leaders closely and strike when the time is right. Let's check out the latest updates and figure out what trading strategy we should use today.
FED is in
On Sunday, the FED cut its benchmark interest rate by 1 percentage point to almost zero and will increase its bond holding by $700 billion to support the US economy from coronavirus outbreaks. The central bank also announced a number of other actions, including allowing banks to borrow for a 90-day discount and reducing the cash reserve requirement ratio to zero. The FED, along with other major central banks, also lowered the interest rate by 25 basis points on liquidity swap agreements in US dollars.
The FED action took less than 2 weeks after they cut interest rates by half a basis point in an emergency move but still failed to reassure worried investors. Earlier, the central bank of New Zealand had cut its base rate to 75 basis points when other stringent controls to limit the impact of coronavirus did not seem to be able to avoid the economic depression.
More and more fluctuation
Following the Fed's sudden move aimed at supporting the world's largest economy from coronavirus effects, the dollar weakened. The yen and Australian dollar surged. Traders expect the market to be more volatile this week on suspicion that the rally in the stock market last Friday will continue. The S&P 500 index rose sharply by 9.3% on Friday. Over the weekend, the US extended travel bans to more countries and virus infections continue to increase in Europe, while airlines continue to take drastic measures to overcome the collapse in tourism.
There is concern that coordination in global policies could justify the strain on the international cooperation system built around the G-7 group, which has been battered since the US president. Donald Trump was elected on the "America First" platform in 2016. Mr. Trump, as the host of the G-7 group, was persuaded to hold an emergency call on Monday and the home. European leaders were not optimistic about the outcome to calm the market. German Chancellor Angela Merkel and French President Emmanuel Macron were annoyed after Trump issued a ban on flights between the United States and Europe without consulting them.
A hit on air
Scandinavia SAS will temporarily lay off 10,000 employees, equivalent to 90% of their workforce, to cope with the impact of coronavirus and related measures from the authorities to limit air travel. international. They emphasize that they are not intended to result in permanent dismissal. Air New Zealand will reduce 85% of its long-haul capacity, suspend routes to North America and Asia, and begin cutting jobs in the context of travel restrictions caused by the coronavirus pandemic. Meanwhile, over the weekend, US airports were struggling to cope with the huge influx of travelers, including many returning from Europe - who faced new screening measures to be housed by the House. White announced last week. Passenger numbers at Hong Kong airport have dropped 68% in February since a year earlier.
Never before seen
The forecast for China 's industrial, investment and retail output data released today will show the first decline in history, a proof of coronavirus' s economic devastation. The epidemic and efforts to slow its spread suddenly crippled the Chinese economy during that time, forcing consumers to cut back on spending and at home, factories to stop production and goods. million people have to stay away from where they work. Sales of cars and homes declined; trade and tourism were interrupted. Last Friday, the People's Bank of China cut banks' cash reserves and injected more money into the world's second-largest economy