Forex Signals Brief for Mar 19: Central Banks Step Up the Fight
Rowan Crosby • 2 min read
US Market Wrap
It was another dirty day on equity markets as stocks tumbled yet again and investors continued to seek the safety of cash.
It wasn’t long ago that many thought, ‘cash is trash’. Well, that doesn’t seem to be the case anymore as the Greenback continues to soar on continued buying. The SPX shed -5% while GOLD and WTI both remain soft.
Central banks are starting to jump on the attack and are starting to launch stimulus measures to try and stem the bleeding. The ECB has announced a 750bn Euro package, while the RBA’s Lowe is speaking later today, where it is expected to see the first round of QE and also another rate cut.
Clearly bond yields will keep getting crushed, but with the flight to bonds being so pronounced, there appears to be little incentive to be buying at current levels, which could open the door to a massive sell-off at some point.
Arguably the most important indicator as to the sentiment and real-life impact of the coronavirus fallout will be out today with US jobless claims.
There is a broad expectation that we will see a huge spike in claims and that gives things a real GFC feel.
There have been so many people impacted both directly and indirectly by this hysteria, that businesses are clearly going to be forced to lay off staff or impose a freeze on new hires.
That makes this a tricky time to navigate. I suspect the dust will settle and people will start to realise that this isn’t the pandemic many fear. But the economic fallout for businesses is a real concern.
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Oil – Pending Signal
WTI has put in another session of staggering losses. With risk-off the order of the day and the flight to the USD, we are seeing huge falls here. At the same time, this will be one to rebound strongly when the bounce finally comes.
SPX – Watching
The SPX has snuck under the 2,400 level, as price fell away once again. This is turning out to be a big level and we are still trying to hunt a bottom in the market, remembering we are more than -30% off the previous highs.
BTC looks like it is making a higher low above the $5,000 level for now and this is bullish.
In reality, Bitcoin is just a sideshow at the moment, with everything else that is going on. But given the price action at current levels, it looks like a short-term bottom is in. A break above $6,000 would confirm that.