Tiomarkets Daily Commentary 23 March 2020

Last week I was personally affected by Covid-19. I ask anyone reading my commentaries to take the threat of Coronavirus very seriously and to adhere to whatever your local governments are asking you to do.

Trying to write commentaries in this carnage is challenging to say the least. We continue to see pure panic grip the markets with moves dominated by what investors have to do not what they want to do. Moves that would normally take weeks now take minutes. Every headline has people running scared. And we all wonder what the global economy will look like when all of this is over. Assuming of course there will come a point when its all over. This week started with more negative headlines. I live in NY state in the US and we now have more cases than South Korea or France. President Trump has called out the National Guard both here and in California. Lock-downs have been declared in places like Australia, and the UK looks certain to follow. So could there be any relief in sight for financial markets?

Monday markets saw US equity futures open limit down (-5%) and FX and commodities taking their now well rehearsed route. Oil and Gold lower, USD higher. EURUSD would slip to 1.0635 and GBP to 1.1505. USDJPY would squeeze to 111.25. Gold would move down to 1482.50 and the DJ futures would take us to 18,209. The US congress continued to discuss a massive rescue and stimulus package but by late Sunday had not reached agreement. Monday morning in the US would begin with some welcome news from the Federal Reserve. Among various initiatives comes a pledge to undertake as much quantitative easing as necessary to keep markets stable and functioning. DJ futures immediately blast higher from 18,400 to 19,924. EURUSD jumps to 1.0800, and XAU to 1520 as markets digest the full package. Of course some of the gains are given back and prior to Wall Street opening, the DJ futures are back to 19,200. Wall Street opens and immediately stocks are slammed - no one cares as we drop back to 18,800 in seconds. Why? Because people have to sell. Back to 18,300 we go before another bounce to 19,000. Another failure and back off we come as the US Congress fails yet again to pass a stimulus package. To cut a long story short, we close around 18,600, this on a day when the Fed said it will do QE in unlimited quantities to support the markets. I guess investors need to see the US stimulus package pass before we get a real bounce. EURUSD ends the day back at 1.0725 and USDJPY is up to 111.25. GBP clings on at 1.1500 as PM Johnson addresses the nation. Today's standout performer? Gold, up to 1554 from 1482.50. Finally it rallies when all else is falling apart.

And so onto the daily conundrum – what chart to show that doesn’t look like the scribbling of a 3 year old? I wish I could find one so I’m going to keep it real simple. Remember the good old days when USDJPY went down when the world was falling apart? Well for the past 2 weeks, its done the exact opposite. I think it is safe to say the world doesn’t look too good at the moment, so this daily chart reminds us what happened on the last 2 occasions USDJPY traded above 112.00. Not a lot of rhyme or reason to FX at the moment, so that’s about all I have form a technical perspective.