Beating continues, what to do with euro, yen & pound

Yesterday was largely typical of the current week: investors continued exodus from risky assets and increased positions in safe-haven assets. Perhaps the main result of the day can be considered the return of the yen to the fold of safe-haven assets. Recall that last week, after the devastating data on Japan's GDP, there was talk that the yen could no longer be a full-fledged refuge. But, judging by its growth yesterday, it’s quite possible for itself. True, such a strong growth of the yen raises questions, but are its buyers too carried away? In the end, no one canceled the failed GDP data, as did the fact that the country was one step away from the recession. So today we are inclined to look for points for purchases of a pair of USDJPY.

Meanwhile, a survey of European companies operating in China showed that 577 out of 577 respondents surveyed expect their performance to worsen due to the epidemic and the downtime of the Chinese economy. The results, although obvious, are no less indicative of this.

The epidemic continues to expand around the world (the number of new cases in the world steadily exceeded the number of new cases of infection in China) and the point is not even the increase in the number of new cases, but the fact that an increasing number of countries are taking certain preventive measures, including restricting travel, school closures, etc. All this, ultimately, will lead to an increase in the scale of economic losses.

Well, the list of companies that have publicly announced the deterioration of their financial results in the future has been replenished with such titans as Microsoft, Anheuser-Busch InBev, etc. Actually, as we predicted in our previous reviews.

Investors, meanwhile, are urgently reviewing their expectations regarding the actions of the Central Banks. In particular, 90% of traders expect a Fed rate cut in April. So yesterday's dollar difficulties in the foreign exchange market are generally understandable.

Nevertheless, the growth of the euro against the dollar seems very abnormal to us and we are inclined to sell a pair of EURUSD today in double, if not triple volumes. Recall that the Eurozone economy continues to experience serious difficulties, and this is still without the consequences of a coronavirus. The situation in Italy also does not contribute to the purchase of the euro. Therefore, we sell the euro against the dollar at full capacity.

As for the general list of our positions for today, it is generally unchanged: we are looking for points for buying gold (but we are careful - we buy on the slopes with mandatory stops), we sell oil, we sell EURUSD, we buy GBPUSD. The only sales of USDJPY today we are replacing with the purchase of a pair with small stops.