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Trump kept eyes on capital infrastructure

01 Apr, 2020

US dollar gold suffered a big setback

Data and news released yesterday:

Federal Reserve: provide repo facility agreements to foreign central banks that open accounts with the New York Fed. The new agreements will allow foreign central banks to use their holdings of US Treasury bonds to obtain US dollars for use within their jurisdiction.

Trump called for another $2 trillion bill. It said it was time to "boldly" implement the infrastructure bill.

Federal Reserve Daley: the Federal Reserve is ready to take measures to deal with the epidemic at all costs.

Federal Reserve Meister: some very poor economic data are expected to appear. Affected by coronavirus, the U.S. unemployment rate increased by more than 10%, and the duration of the economic slowdown will depend on the epidemic.

Coronavirus pneumonia response measures were held by video conference of leaders of EU main organs.

The market expects OPEC oil production to increase by 90,000 barrels / day to 27,930,000 barrels / day in March, and Saudi Arabia and the United Arab Emirates increase oil production after the collapse of OPEC + oil production reduction agreement.

 

Market Volatility:

The US dollar index fell 0.06% to near 98.95; it rose 0.86% in March and 2.55% quarterly.

The euro fell 0.15% to around 1.1031, down 1.1% to $1.0927 at one time in the session; it rose 0.05% slightly in March, down 1.61% in the first quarter.

USD/JPY fell 0.20% to 107.54, reaching about 108.73 in the intraday period. The monthly decline was 0.32%, and the quarterly decline was 1.12%.

The pound was close to flat at around 1.2420, down 1.4% before yesterday's trading and 3.14% in March. The UK's current double deficit is the largest of the G10 currencies.

Spot gold retreated under pressure, falling nearly 3% at one time in the session, setting a new low of nearly a week to 1,574.73 US dollars / ounce. The continuous rebound of the US dollar made the gold price under pressure.

WTI crude oil futures in May rose by $0.39, or 1.94%, to $20.48/barrel. It fell 54% in March and 66% in the first quarter. Brent crude oil futures in May fell 0.02, or 0.09%, to $22.74/barrel.

 

CWG future forecast:

There are still a lot of data on this trading day. In early trading, the Australian Federal Reserve released the minutes of its monetary policy meeting; in Europe, PMI of European countries joined hands with the unemployment rate of the euro zone. In the US session, ADP employment and PMI data in the US hit the market, coupled with the non-farm sector in the future, the market is bound to be more volatile.

Institutional Analysis: as funding pressures ease and the Federal Reserve expands its balance sheet, the dollar exchange rate "will need to fall in the medium term.". The most reliable reason to short the dollar is because the Fed has taken extraordinary measures since the crisis broke out. Looking back on history, any positive expansion of the balance sheet (such as 20-40% per year) is accompanied by the decline of the US dollar trade weighted exchange rate. This time, we will reach this expansion rate again. It is suggested to focus on the euro, yen and gold.

 

Financial calendar:

08:30 RBA to release minutes of monetary policy meeting

14: 00 Germany February actual retail sales monthly rate

15: 50 March Markit manufacturing PMI in France

15: 55 March Markit manufacturing PMI in Germany

16: Euro zone March Markit manufacturing PMI

16: 30 March Markit manufacturing PMI

17: 00 euro zone unemployment rate in February

20: 15 ADP employment in March

21:45 March Markit manufacturing PMI

22:00 us march ism manufacturing PMI

EIA crude oil inventory for the week from 22:30 to March 27

 

CWG financial knowledge:

ADP employment in the United States: ADP employment is the result of an anonymous survey of the employment status of about 500,000 U.S. business customers, according to the American automation data processing company. The data calculation method is similar to the monthly labor market data of the U.S. Department of labor, and it is published two days before the data of the Department of labor. Therefore, it is usually regarded as the first reference index before the monthly non-agricultural employment report, but the index is highly volatile. If the data is better than expected, it will be good for us dollar, otherwise it will be bad for us dollar.

 

CWG Markets, as a fully authorized and regulated trading service provider of FCA, the contents and opinions contained in this article are only general information and do not take your investment objectives, financial situation and investment needs into account. Any reference to historical price fluctuations or price levels is based on our analysis and does not indicate or prove that such fluctuations or price levels are likely to recur in the future. CFD is a complex instrument, and there is a risk of rapid loss due to leverage. You should consider whether you understand how CFD works and whether you are able to take the risk of losing money. If you have any questions, please seek advice from an independent consultant. For more details, please visit www.cwgsvg.com to obtain and refer to the company's risk disclosure summary.