Analytics By Fibo Group

Bank of Canada cut interest rates by 0.5%

The Bank of Canada on Wednesday, March 4, announced a reduction in the key rate to 1.25%. He attributed this to a reaction to the spread of coronavirus, a threat to the Canadian and global economies.

In fact, it was not the virus that caused the easing of monetary policy, but the actions of the American mega-regulator. It is the emergency cut in the key Fed rate of America that forces other countries to do the same. Australia and Malaysia have already lowered interest rates. Also, representatives of the Bank of Japan announced the imminent adoption of similar measures.

A more predictable situation is now in the Euro zone. The ECB will also be forced to launch regular incentives, but the maximum that the ECB can give is only a tenth of a percent (reduction in deposit rates by 0.1%) and this will not bring any obvious economic effect.
Due to the predictability of regulators, the situation on currency pairs is becoming clearer. #EURUSD after the end of a hard correction (coronavirus) Euro is destined to grow throughout the current year.

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Bank of England under pressure from the Fed

On Tuesday, the US Federal Reserve made an urgent call to lower rates in response to growing concerns about the impact of coronavirus on the global economy. Canada, Australia, Malaysia were forced to lower their …

However, the Bank of England is abstaining, like the English gentleman - culturally, but adamantly: Mark Carney, the current manager, suggested that the Bank might consider lowering rates to mitigate the impact of the coronavirus outbreak on the UK economy.

Mark Carney’s time ends and March 17, 2020 will be replaced by Andrew Bailey - a banker by vocation. His rhetoric differs from what the current chairman says, namely: at the moment the economy does not have enough room for maneuver in politics, but he (Bailey) can lower rates to 0.10%.

From this we can conclude that at the next meeting on March 28, the key rate will be reduced, because Andrew Bailey will be in office for almost two weeks.

We believe that future incentives will support #GBPUSD and purchases are quite attractive at the moment, because The price of the pound sterling is at the lows of the current year.

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:bomb: Oil Armageddon brought down the economy :bomb:

2020 barely began, and has already brought many shocks: the aggravation of relations between the United States and Iran, Turkey and Syria; decline in production in China due to coronavirus, and now there is also the exit of the largest player - Russia - from the OPEC + deal. This is what plunged the world economy into the abyss of chaos.

Last Friday, the Minister of Energy of the Russian Federation made it clear to # OPEC members that Russia would not review its oil and gas policy. The answer was an increase in production by absolutely all participants in the oil cartel (and not only it)
as a result - # oil hit a record 20%
:chart_with_downwards_trend:Failure in stock markets - in Asia, the decline was 3-6%, Europe is falling by 5-8%.

:black_flag: A wave of bankruptcies is coming among American oil producers who produce shale oil on condition that prices are above $ 45.
Against the backdrop of risk aversion in the economies of Europe and Japan in a recession (they invested in #dollar assets, respectively, they are already losing 8-10% on currency revaluation - for the economy this is a powerful blow from which they may not recover)

Considering where the prices for bonds are now (the Fed still needs to lower rates by 0.5% once to “legitimize them”), in the wake of incentives from the Central Bank of the World, money will go either to stocks or to gold.
We confirm the forecast for #XAUUSD - BUY !. Target - $ 1800

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:uk: The Bank of England unexpectedly lowered its rate to 0.25% per annum due to coronavirus :uk:

From a press release from the Bank of England

:biohazard:️ “After the spread of Covid-19, prices for risky assets and commodities fell sharply, and government bond yields reached a record low, which was accompanied by a noticeable deterioration in risk appetite and the prospects for global and British growth.

:chart_with_downwards_trend: Reducing the bank rate will help maintain the confidence of business and consumers in difficult times, strengthen the cash flows of enterprises and households, as well as reduce costs and improve the availability of finance. ”

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:bomb: US Federal Reserve kicked off currency wars :bomb:

What has already happened❓

March 3, the Central Bank of Australia lowered the interest rate by 0.25%

March 3, the US Federal Reserve at an emergency meeting lowered rates by 0.5%

March 4, Central Bank of Canada lowered rates by 0.5%

Friday, March 6 - OPEC collapse +

March 10 start of stimulus measures by ALL Central Banks of the world.

March 11, the Central Bank of England at an extraordinary meeting reduces the% rate by 0.5%

What will happen soon❗️

:us: The Fed will reduce the interest rate by 0.50% at a meeting on March 17-18 and again on April 28-29 - it will become zero.

:eu: The ECB will reduce its rate by 0.10% and resume quantitative easing.

:canada: The Central Bank of Canada at an extraordinary meeting will reduce the rate by 0.75%
As a result of the rate-cutting process launched by the Fed, Japan and Europe suffer the most.

:jp: In Japan, as much as half a year, the recession is constantly talking about this, Mr. Kuroda. Economic activity is declining. With zero interest rates and zero inflation (a fabulous country, isn’t it)) The regulator, which has invested most of its reserves in American bonds, suffers losses due to currency revaluation (currently about 9%). It turns out an analogue of margin call, only on a state scale. Investors flee to the Japanese yen.

:eu: In Europe there are a lot of zombie companies that are overloaded with debt and will be forced to suffer losses due to rising inflation. With near-zero rates, this puts Europe on a par with the Japanese economy. Plus, against the background of coronavirus, business activity and demand are falling (and this process is accelerating).

When Europeans and Japanese sell bonds, they take them home, which further drops the dollar, strengthens their currencies and creates problems in Japan and Europe:
Forecast Value #USDJPY 95.00
Forecast value #EURUSD 1,2000

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Crisis: Donald Trump moves markets again

Having come to power almost 4 years ago, Donald Trump carried out very loud verbal interventions.
Against the backdrop of the fierce remarks of the billionaire president, there is even a new way to analyze the markets - #TwitterTrump.
However, over time, the effect of these statements came to naught. And again, Donald managed to influence the situation.

  • USA closes borders for travelers from Europe for the next 30 days.

  • These restrictions do not apply to the UK.

  • This is not due to the economic crisis.
    © Donald Trump
    Despite his assurances that there was no connection with the global economy, the world markets continued to fall - the indices of Asia, Europe, the United States went into the negative zone.
    Some commodity currencies are losing more than 2% today.

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ECB: NO Signs of Tension

At today’s meeting, the ECB left interest rates unchanged. The accompanying press release states: - “The Board of Governors does not see significant signs of tension in the money markets or lack of liquidity in the banking system.” ©
But despite the apparent calm, the ECB still announced a new refinancing program (#LTRO) to support liquidity in the money market. To avoid defaults, the ECB also softens capital adequacy requirements for commercial banks.

In a published press release, the ECB is disingenuous, there is tension, and quite strong, it can be seen in the dynamics of major currency pairs.
Funds and banks currently have serious budget holes, they have to sell off defensive assets (note the decline in #gold today).
Investors simply pull their money out of #treasuries and gold to avoid margin calls.

The situation is becoming more and more interesting, theoretically, you can even earn money on it (for example, buy gold at the current failure), practically you can buy one bottom and get a couple more as a gift.
Traders - people are not superstitious, but still, #13thFriday has a good chance of becoming a new storyline for a film about the financial crisis.

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US import prices fell record 6 months

Import prices in the #US. in February fell the most in six months due to falling oil prices, and economists said they could fall even further due to the coronavirus pandemic and the #oil price war between #SaudiArabia and #Russia.

The virus has disrupted supply chains since #China, the main source of resources used in many plants in the United States, has shown the worst performance since 2015.

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The US Federal Reserve urgently cut the rate to almost zero

The American regulator has taken decisive measures to improve the economic situation.

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:exclamation:️Financial calendar​:exclamation:️

Week starts with stress. The Fed cut rates to zero and launches QE by $ 700 billion. The vast majority of global regulators blow dust from printing presses and run them at full capacity. The blame for the global epidemic of coronavirus.
We think that the markets will continue to fall all this week. Macro indicators of the economic calendar will be relegated to the background. We recommend restricting trade and monitoring the actions of the Central Bank of the world in published press releases.

Weekly Calendar:
03/16/2020, Monday
:us: US Federal Reserve interest rate
:new_zealand: #interest rate RBNZ

03/17/2020, Tuesday
:uk: #unemployment in the UK.
:us: #US inflation

03/18/2020, Wednesday
:eu: #EU inflation in February.
:canada: #inflation in Canada for February.
:oil_drum: US crude oil reserves

03/19/2020, Thursday
:new_zealand: #GDP in New Zealand for 4 square meters.
:australia: #unemployment in Australia.
:switzerland: #interest rate of the Central Bank of Switzerland

03/20/2020, Friday
:canada: #inflation CPI #Canada Basic

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Opinions: The market has bottomed out

According to Morgan Stanley analysts, the global financial markets are currently in the bottom-up phase, so investors should strengthen their positions in the market for risky assets and sell #dollar #US.
Strategists recommend buying #EURUSD with a target of 1.16

According to the analytical department, the recovery will not be limited only to the growth of #EURUSD
We assume that the recovery will affect #gold, all commodity currencies about the main currency pairs.

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“Your Royal Highness”: US asks Saudi Arabia to stop

According to Politico, 13 Republican senators addressed a letter to Crown Prince Mohammed bin Salman.

  • “Your Royal Highness,” - they write. “ - The United States has for many years been a strong and reliable partner of Saudi Arabia. In the light of this close strategic relationship, the kingdom’s plans to lower prices and increase production capacity were deeply worried. This led to the collapse of world oil prices in a situation when the financial markets of the world have already suffered serious losses. "
    Since the beginning of 2020, the price of Brent crude oil has fallen by 54% to $ 30.5, that is, towards the levels of the end of 2015. High-cost shale oil production is becoming unprofitable.
    Shales are forced to reduce production, up to the conservation of deposits. Upstream companies have significantly reduced costs in the hope of waiting for a period of low oil prices.
    In order to get out of the depths of stagnation, American oil companies need quotes of their oil at about $ 50 per barrel (according to Rystad Energy, only a few shale companies have a break-even level below current prices, and more than 95% receive losses)
    Even if a miracle happens and #WTI prices stabilize at $ 40, it will still entail the collapse of the US oil industry.

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Australian dollar at 17 year low

The Australian dollar continues to experience the fallout caused by the coronavirus as it tumbled to a 17 year low in yesterday’s trading session against its US counterpart, and there is little reason to believe the currency will recover any time soon.

A weaker Australian dollar normally helps the local economy with increased demand for domestic products such as Iron ore and services which includes the tourism sector. The coronavirus outbreak means the usual benefits that a lower Aussie dollar provides will now be put on hold until there is more clarity surrounding the issue.

“A lower Aussie dollar is good when global growth is good because we have demand for our goods at a cheaper price” said IFM Investors chief economist Alex Joiner
"The most stark example of that has been services exports, with tourism and education much less expensive. In the current environment, there’s just no demand for those services and no scope for those services given the travel ban.” he added.

The Reserve Bank of Australia is expected to cut interest rates on Thursday to a new low of 0.25 percent on Thursday afternoon to support the Australian economy which has been in free fall since the inception of the coronavirus.
The central bank is also expected to announce measure on introducing a quantitive easing program, following in the footsteps of the US as an added measure to support the economy.

These moves may help the local economy to a certain extent, but the biggest worry is China, Australia’s largest trading partner and how long it will take to recover economically, which according to some analysts, will take an extended period of time.

“The initial data from China suggests that its economy was hit far harder than projected, though a tentative stabilization has begun. It is difficult to measure how much output will be permanently lost as a result of COVID-19” said S&P chief economist Paul Gruenwald said.

“While the focus now (In China) is rightly on containing the virus and measuring its downside effects, the strength of the eventual recovery will depend crucially on how much output can be replaced.” He added.

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Saudi Arabia promised months to fill the market with cheap oil

“The Department of Energy has instructed Saudi Aramco to continue delivering oil at 12.3 million barrels per day over the coming months,” the Saudi Arabian Energy Ministry said in a document.

The maximum production policy was announced by Saudi Arabia after Russia refused to cut production. The kingdom kept its production at around 9.7 million barrels per day and is now increasing it by a third. In addition, Riyadh announced a sharp decline in prices for its varieties: April shipments to Europe will be shipped at a price 10.25 dollars below Brent.

As a result of the policy of maximum production, the United States will suffer first of all.
Their oil storage facilities are half full and can accommodate another 135 million barrels.
With a weekly increase in US commercial oil reserves of 14 million b / d, all storage facilities will be full in 10 weeks.
Lack of storage will drive up the cost of freighting tankers that can be filled with oil in the absence of ground reservoirs, and will make exporting black gold from the US economically pointless.

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:zap:Global recession :zap:

Global markets have so far failed to find at least some respite and be in a downward corkscrew.

:us: Dollar updates historic highs.

:uk:The British pound fell to its lowest level against the dollar in 35 years.

:oil_drum: Oil broke through $ 25 per barrel in value (Iraq called on OPEC to convene an extraordinary OPEC + meeting to stabilize the market)

:australia: Bank of Australia lowered its key rate and moves to manual control of profitability [state bonds]

We believe that the reversal is close, because liquidity crisis is over. This is indicated by the dynamics of the value of gold, which is consolidating in the new range. Investors have ceased to get rid of defensive assets, as the Fed and other Central Banks of the world coordinate efforts to ensure dollar liquidity around the world using tools such as swap lines. We expect these fears to dissipate and then we can expect a recovery that could be as strong as the fall in recent days.

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Counterattack of central banks

Central banks around the world include anti-virus boost.
The European Central Bank has launched a program of redemption of bonds worth 750 billion euros, which will last at least until the end of the year.
The Central Bank of Australia lowered the rate to 0.25%, Brazil - to a record low 3.75%, and the Swiss regulator, although it kept the rate, announced an increase in foreign exchange interventions against the strengthening of the franc.

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Crisis: US Labor Market Collapse

According to the Ministry of Labor on Thursday, 281,000 people applied for benefits for the first time - 70,000 more than the week before last. The new figure is the highest for two and a half years.

At first glance, it’s not a very important indicator for trading on currency pairs. However, in the current situation, this may become the next black swan. About half of those working in the United States are private businesses, whose rents account for the largest portion of business expenses. And it’s easier to close a business and then reopen without debt (this is better than paying rent in the absence of sales and movement restrictions).

In the current situation, the best way out is to wait until next Thursday, there are well-founded reasons that the number of unemployed American businessmen will increase.
And these are very serious risks and maybe we will see another bottom on #EURUSD and world stock indices.

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:loudspeaker: Forex analytics :loudspeaker:

:fire:Market Watch​:fire:

:boom:Europe is preparing for a total quarantine :boom:

On Thursday, March 19, it became quite complicated for Europe and, in particular, European currencies. Let me remind you that Italy still faces a continuous quarantine zone which restricts the movement of the population. France also followed in the footsteps of Italy and in a number of other European countries the situation remains quite complex. Given the rapid spread of the virus in Europe, the situation is bound to remain volatile in the coming days.
As a result, we observed a sharp fall in the EUR / USD currency pair which brought it to the lowest levels since 2017. At the same time, there remains a lot of buying interest around the 1.0785 level which for now should keep the Euro from suffering further losses.
The situation is similar with the GBP / USD currency pair which hit historical lows. Today we are already seeing some type of rebound with the target at 1.2000 and even to 1.2125. This scenario will be a major target but we may see a return to the support level of 1.1785. However, active market purchases are no longer feasible, since now there is no way to place a short “stop” to get a risk to profit ratio of 1 to 3 or more.
The rapid deterioration of the economic situation in Europe and the talk by several countries on the possible extension of quarantine, as well as moves by the Fed who are attempting to save the US stock market, contributed to the strengthening of the USD. I’ll draw attention to the US dollar index, which has reached its highest level since 2016, which, in turn, increases the risk of a strong correction in the short term.
Now let’s move on to the oil market and in particular, American grade WTI. After collapsing to $ 20.5 per barrel, buying interest has picked up. But it’s hard to imagine a significant increase in prices until the position of Russia and Saudi Arabia on the issue of production, as well as stabilization of the situation associated with the coronavirus, changes.
And traditionally for the Friday review, we will consider two transactions for traders on the purchase of the GBP / USD currency pair in full lot. The first deal to buy was opened on Thursday, March 19, at a price of 1.1480. The Take Profit order was set at 1.1650. As you know, the pair reached the level of 1.1792 that day, but then collapsed under the support level of 1.1465. Since buyers immediately managed to return above the noted support level, it was decided to open another buy deal from the level of 1.1480, setting a Take Profit at 1.1780 - the previous maximum. The total Profit on two transactions amounted to $ 4700.

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US will buy a billion barrels of oil

The US Treasury Department recommends that President Donald Trump allocate $ 10-20 billion for the purchase of oil in the Strategic Petroleum Reserve (SPR).

At current prices of the American WTI grade ($ 22 per barrel for delivery in April), this means a purchase of 454-909 million barrels. The acquisition of oil will be aimed at keeping the reserve filled to capacity for a decade.

How exactly this will be done is unclear, most likely, things will not go beyond verbal rhetoric, because strategic oil reserve a week ago contained 635 million barrels with a total capacity of 727 million barrels.

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:loudspeaker: Forex analytics :loudspeaker:

:fire:Market Watch​:fire:

:boom:Italy shows more rounds of disappointing data​:boom:

US and European stock markets are in a bearish trend and there are no real reasons the situation will change. In fact, the volatility of the stock indices reflects the real mood and expectations of large investors - a panic mood. The reason for the panic is total quarantine in most European countries, as well as other countries in the world.
It is worth noting that by the end of last week, the amount of sellers, both on the stock market and foreign exchange market, had noticeably declined. For example, buyers of the EUR / USD and GBP / US currency pairs managed to compensate for some of the lost positions. But today we are seeing a moderate weakening of EUR and GBP.
So, the quotes of the EUR / USD currency pair returned to the psychological level of 1.0700, while only a break of support at 1.0650 will indicate the possibility of a further selloff to 1.0570 and 1.0500. The situation with the GBP / USD currency pair is similar - after an unsuccessful attempt by buyers to push the pound higher, the pair returned to the support level of 1.1655. As a result, the risk of a breakdown of support at 1.1540 and a further decline to 1.1425–1.1465 is quite possible.
Let me remind you that the ECB continues to use not only verbal interventions, but also various tools to stabilize the economy. At the same time, regular statements by representatives of the ECB about the readiness to participate more actively if necessary, play an important role, thereby providing support to the stock market while at the same time putting pressure on the EUR.
Turning to the oil market, which continues to decline, I note the increasing risk of a collapse in the price of WTI in the region of $ 16– $ 18 per barrel. At the same time, I do not expect prices to remain at this level for the long-. Therefore, I consider the decline in oil prices as a more favorable point for opening long positions. Of course, we are talking about medium-term trading in the context of several weeks, possibly even months.
To sum up, I will turn to the US and their attempts to restrain panic in the financial markets, as well as among the population. We are talking about a package of incentive measures for some sectors of the economy, for example, industrial, as well as airlines, small businesses and households. They plan to allocate at least $ 1 trillion for this, which should help markets avoid further losses in the long run.

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