A new month is upon us. March 2020 will for most of us be one that saw the world change almost overnight. Our behaviors, our social interactions and our daily lives changed beyond all recognition. A simple trip to the supermarket now becomes fraught with danger and anxiety. And of course financial markets have changed too. Despite the announcement of massive stimulus plans the world over, uncertainty remains the only certainty. While equity markets have staged somewhat of a recovery, rallies are still prone to being sold. For FX it’s a market driven by real flows rather than speculative ones. Hopefully, April will bring some clarity for investors. But with many European countries as well as the US all communicating the worst is yet to come, the world waits to see what the future holds.
The first day of a new month brings more losses to equity markets. The DJ futures are lower by 4% prior to the opening bell. Equity markets in Europe show similar losses. The USD has generally benefited from the renewed negativity with EURUSD dropping to 1.0920, GBPUSD to 1.2330 and AUD to 0.6050. USDJPY would be the exception, as traditional ‘risk-off’ trades weighed, sending it down to 109.30 prior to the US equity market open. Yesterday’s sell-off in XAU is partially reversed during European trade, briefly rallying to 1,600. But we are back to 1,585 as equity futures creep lower. ADP employment data, often a much-analyzed pre-cursor to Friday’s NFP number, comes in better than expected. But does it really mean anything? No, probably not. How about some US ISM Manufacturing data? Again, better than expected but of little relevance. US Initial jobless claims on Thursday might provide more insight into the current state of play. For the US day it was a case of back and forth in FX. As mentioned before, flows are dominated more by real supply and demand than the usual speculative variety. This in turn leads to little in the way of trends. EURUSD would continue its move lower down to 1.0903 before closing above 1.0960. GBPUSD would bounce either side of 1.2400 before closing at…yes 1.2400! USDJPY was the only real steady mover, sliding as low as 106.92 before ending at 107.10. That indicates what happened to equity markets and it wasn’t pretty with the DJ down 973 points or 4.4% on the day. XAU ended little changed on the day around 1,588 after having failed to break either side of the market. If there was any good news out there, I must have missed it.
Once again when it comes to charts, I’m trying to keep it real simple. Only an hourly chart of EURUSD today and just looking at the momentum from the past few sessions. Today saw a bounce off the 1.0900 area but the short term trend line off 1.1150 looms. A couple of different ways to play it ahead of that line if you so choose. And it would appear there is short term demand lurking back at 1.0900. Good luck.