ZFX: Oil jump lifting the market sentiment
On Thursday (April 2), the employment figure released by the United States scared investors, but then a positive news from the oil market boosted market confidence. Investors is expecting a truce in the price war between Saudi Arabia and Russia. The three major Wall Street indexes were still up, which the Dow and S&P both gained more than 2%, under the fears of new coronavirus pandemic.
Investors closely monitored the initial jobless claim of US since last week. As a result, the initial claims for unemployment benefits rose to 6.648 million, which is twice of the previous figures, far more than the expected. The average of the economists' estimates was just 3 million. Although the market has a certain degree of expectations, the numbers are still quite surprising and the market became more risk averse. Most analysts now believe that the US economy will shrink severely by at least 10% in the second quarter, and the unemployment rate will rise to 10% -20% level.
However, shortly after the opening of U.S market, US President Trump said that Russia and Saudi Arabia are about to reach an agreement on production cuts, jointly lower the production by at least 10 million barrels of crude oil. It is reported that the Saudi Crown Prince and Trump have been made a call regarding the oil market. Saudi Arabia also called for an emergency OPEC+ meeting to restore the necessary balance of the oil market under the principle of a fair agreement.
ZFX analyst Jacob Leung said that the good news in the oil market has been brewing for a long time. In the short term, the news changes the bearish fundamental of the oil market. It is expected that oil prices (WTI) will not go back to $20 below.
Of course the end of the price war eases the selling pressure on oil, but in the medium to long term, it will still depend on the epidemic development. Global economy will be highly uncertain this year and the demand of crude oil would be a long term downturn.
The pandemic showed no signs of control, raging in more than 200 countries, more than 1 million confirmed cases, and more than 51,000 deaths. ZFX analyst Jacob Leung said that many countries are currently conducting large-scale testing so that the increase of confirmed cases worldwide will still be accelerated. Based on the current increasing rate, the number will be close to 2 million in two weeks, which will greatly hit the market sentiment.
About the market trends, the greenback has also rebounded to recover the 100 mark, somehow reflecting the market's need for risk aversion, explaining the stable gold market last night. On Friday, the investors are preparing to bet onthe announcement of NonFarm Payroll and ISM non-manufacturing indexes in March.
Market theme / sentiment: The rebound in the oil market is slightly positive for the Aussie.
Support levels: 0.6000; 0.5970 Resistance levels: 0.6070; 0.6120
Recommendation: short 0.6080, target 0.6050, stop loss 0.6110. (It is recommended not to consider the bid-ask spread factor)
Position follow-up and profit and loss: 0.6100 has been shorted, with a target of 0.6050. (TP) (It is recommended not to consider the bid-ask spread factor)
Cumulative profit and loss: 555 pips
Market theme / sentiment: The European epidemic is still severe, making euro’s decline.
Support levels: 1.0800; 1.0750 Resistance levels: 1.0880; 1.0915
Recommendation: short 1.0880, target 1.0850, stop loss 1.0920. (It is recommended not to consider the bid-ask spread factor)
Position follow-up and profit and loss: 1.0900 has been long, and the stop loss is at 1.0860. (Stop Loss) (It is recommended not to consider the bid-ask spread factor)
Cumulative profit and loss: 320 pips
Market theme / sentiment: The pound has no response compare with the other currencies.
Support levels: 1.2350; 1.2300 Resistance levels: 1.2430; 1.2460
Recommendation: wait and see. (It is recommended not to consider the bid-ask spread factor)
Position follow-up and profit and loss: 1.2400 has been shorted, and the target of 1.2380 has been changed. (TP) 1.2350 has been shorted with a stop loss at 1.2400. (Stop Loss) (It is recommended not to consider the bid-ask spread factor)
Cumulative profit and loss: 320 pips
Market theme / sentiment: The US economic is gloomy, and the gold price go higher.
Support levels: 1600; 1585 Resistance levels: 1620; 1635
Recommendation: short 1607, target 1602, stop loss 1612. (It is recommended not to consider the bid-ask spread factor)
Position follow-up and profit and loss: 1590 has been shorted and the stop loss is at 1597. (Stop Loss) (It is recommended not to consider the bid-ask spread factor)
Cumulative profit and loss: -67 USD
USOIL (US crude oil)
Market theme / sentiment: Major fundamentals have changed and oil price volatility has increased.
Support levels: 25.00; 24.00 Resistance levels: 26.50; 28.00
Recommendation: Due to the large difference in OTC quotes, no recommendation is made.
Position follow-up and profit and loss: —
Cumulative profit and loss: $ 9.8
Risk Warning: The above content is for reference only, and does not represent ZFX's position. ZFX is not responsible for any form of loss caused by any trading operations conducted in accordance with this article. Please be firm in your thinking and take appropriate risk control.