Mar 02 2020 1
It's a new month now. March has come. The world is still struggling to deal with the complicated spread of the virus. Let's check out the latest update globally and see what forex trading strategies we should apply.
Ready for a cut
The Federal Reserve is currently preparing for a rate cut this month, although it admits monetary policy cannot fully protect the US economy increasingly threatened by Coronavirus. Fed Chairman, Mr. Jerome Powell, opened the door for interest rate cuts at the Fed meeting on March 17-18 by making a commitment to "act accordingly" to support the global economy. Traders and a host of Wall Street banks now expect the Fed to lower interest rates in the coming months, and some even see the possibility of an urgent rate cut before the bank's March meeting.
The rise of risk factor
Traders across the globe are gearing up for another tough week as they soon see the brutality returning to the market after risky currencies plummeted early in the session. Any consolation from the Federal Reserve says it will act by cutting interest rates to ensure the economic effects of the Coronavirus are fleeting. The offshore renminbi (CNH) fell and the Australian dollar fell to a new low of 11 years as investors increased their bets to gain further monetary stimulus. Yen increased; Australian and New Zealand government bond yields have dropped to new all-time lows as recent complaints about safe haven assets have yet to show signs of surrender.
The focus will be on the yuan, which has slumped after last weekend data showed that trading activity eased significantly last month. Asian futures market is on the decline. US stocks also saw their worst week since the financial crisis on Friday. Treasury bonds surged, pushing yields on 10-year and 30-year notes to a record low. The number of virus infections in Italy has increased by more than 50%, while the United States, Australia and Thailand have reported their first deaths.
Oil hits bottom
According to traders, investors and analysts, oil consumption may not grow in 2020 - only for the fourth time in nearly 40 years. For OPEC, the gathering in Vienna this week to discuss production policy is a nightmare scenario, potentially forcing the organization to cut deep production when the Corona virus crisis is taking place on. global and impact on energy needs. In interviews at the annual International Oil and Gas Week - a major oil industry meeting in London last week - Traders had to reevaluate the impact of the virus on the global economy. demand after evidence darkened psychology as a result of an epidemic spreading from Italy to Iran.
China's economy may head towards a worse-than-expected decline in the first quarter after the country's manufacturing sector reported operating at a record low in February due to a boom in the economy. According to data released by the National Bureau of Statistics on Saturday, the index of manufacturing purchasing managers fell to 35.7 from 50 last month. Even before that data, the forecast still shows that the economy will decline in 3 months (from the last quarter of 2019 to March). Nomura economists said gross domestic product could now fall 2.5% in the first quarter compared to the previous period.
A vulnerable market
The recovery of the Chinese stock market may soon face a real test: a massive issuance of shares and corporate bonds as companies rush to implement most of the preferential policies. treat. The number of mainland listed companies that announced plans to issue additional shares in February was the highest since April 2016 at 40. CICC analysts predict that up to 30% of businesses can plan to issue shares unlisted next year, well beyond the threshold of 2015 when the stock bubble formed and burst. Meanwhile, the value of debt issued by Chinese lenders to domestic businesses last month more than doubled from last year.