On Tuesday the markets calmed down a little and we saw a slight increase. This is already encouraging, because no one knew what kind of reaction would follow after such a serious collapse. There were rumors of measures to stimulate the U.S. economy, which should prevent markets from falling even deeper.
The USD index chart of the day
The US has come up with various measures to support the economy. From cutting the rate by as much as 0.75% to cutting various taxes. Japan activated a second $4 billion stimulus package, mainly aimed at mitigating losses from coronavirus infection as well as encouraging small private businesses. On Tuesday, S&P500 rose by 0.6%, DOW by 0.8% and DAX closed minus 1.4%.
On Tuesday, due to positive news from the U.S. government and the preliminary stimulus package, we see the US dollar strengthening against all currencies. We predicted that sooner or later correction in the market will occur. Someone fixed the profit made, someone used the correction to make profit. The US dollar is growing by about 1.5% to all major currencies. We will observe the development of the situation. Serious stimulus measures are not in favor of a strong dollar. Therefore, this correction may be temporary. If partner countries do not take appropriate measures, their local currencies will inevitably strengthen against the dollar.
Oil tried to win back its losses and grew by almost 8% on Tuesday. Of course the price of $37 per barrel is not enough for exporting countries, but we probably see the beginning of a price war. Russia is not satisfied with shale oil production in the U.S., but the short-term effect will not affect it in any way, as most companies have already hedged the risk of a price decline. The time of low oil prices is ahead and the economy that was more ready for this turn of events will win this war.
Gold became cheaper and is traded at $1652 per ounce. In fact, it was an expected movement, as the markets started to correct in all directions. The level of $1700 per ounce is still in force, and probably, after the correction, gold will check it again.
What is waiting for us today?
10.30 British GDP for February
13.30 US consumer price index base for February
15.30 US crude oil reserves
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