Collinsonfx Weekly Marketing Commentary and Calendar

Daily Market Commentary

President Trump announced a State of Emergency and introduced measures to coordinate the Private and Public sectors in response to the pandemic. The crises has spread like wildfire across Europe and the US has acted accordingly with travel bans. Travel bans and suspension of mass gatherings are combating the spread of the virus, meanwhile some economies have virtually shut down. Testing of infections and trials for an antidote are fast moving. Calm and control are key to a solution to the market crises.
 
US equities rebounded strongly, after the previous days massive losses, with the biggest ever point gain on the Dow! This crises will not be resolved overnight, but gaining control of markets and sentiment is key to overcoming the crises, over the coming days and weeks. Economic data is all but irrelevant to markets, as they have been overwhelmed by the panic from the spread of the virus and the impact on markets. Data will start to reflect the economic shut downs and the destruction of existing supply chains and the free movement of people. Perception is key to market behaviour. If calm and control is established, fiscal and monetary stimulus will address the impact of the virus on the markets and global economies. The stronger economies may well avoid recession due to the timely and coordinated massive intervention of Central Banks and Governments.
 
The Trump administration has stepped in to buy massive amounts of oil to re-stock the 'Strategic Petroleum Reserve' at the current low prices. The SPR is the emergency supply the US created after the 70's oil crises and can hold up to 727 million barrels of oil! The markets rebound included rising Bond Yields and continued flows in to the reserve currency, the 'Big Dollar'. The GBP crashed to trade 1.2310, while the EUR fell back to 1.1070. The trade exposed commodity currencies were also hit hard, with the AUD falling to 0.6130, despite best efforts from the Government and RBA. The inaction of the NZ Government (although rhetoric has been reactionary) and the RBNZ (who did not take emergency action along with the Fed and the Bank of England) has resulted in a stronger performance than most currencies, although it did fall to lows just above 0.6000.
 
Markets may anticipate a positive start to the new week, after the resurgent close to the tumultuous week, depending on events over the weekend. Roosevelt's first inaugural speech warned citizens that "the only thing to fear, was fear itself". This is a warning to avoid panic and to restore logical and reasoned behaviour and is a message for most crises.