While usually quiet, today is not a day to have open positions as economic reports and news could cause disruptions with little liquidity to create friction, reports Joe Perry.
Today, much of the world is shut down, observing Good Friday. Many stock and bond markets around the world will be closed, such as the US, UK, Germany, France, Spain, Italy, Australia, and Canada. Therefore, one may expect that with many market players taking the day off, that the FX markets should be quiet. That has traditionally been a reasonable assumption over a long global holiday weekend. However, in these unprecedented times, any news that may come out tomorrow could also accompany extreme volatility. As participation will be low, there will not be as many resting buy or sell orders in the FX market.
There are four events to look for, which may cause volatility in the forex space:
- The Data
China is due to release their CPI and PPI data. Expectations are for 4.8% and -1.1%, respectively. If the data comes out dramatically different than expected, the dollar/yuan (USD/CNH) may have a large move. In addition, although U.S. markets are closed, they are expected to release their own CPI and Core CPI data. Expectations are for -0.3%) and 0.1%, respectively. Also, the Federal Reserve’s Mester and Quarles are both expected to speak tomorrow.
- OPEC+ Comments
As of close of business Thursday, OPEC++ have agreed to cut back in production of 10 million barrels per day (bpd) through July, then 8 million bpd from July to December, followed by 6 million bpd from January 2021 through April 2022. WTI Crude oil which had rallied into the announcement, however, has sold off from $28.21 to $22.48 after the deal was announced. However, if the deal does not go through, or if there are negative comments tomorrow, crude could sell off even further. This would cause crude sensitive currencies to move as well, such as USD/CAD, USD/NOK, and USD/MNX.
Source: Tradingview, FOREX.com
- European Rescue Plan
As of close of business Thursday, EU finance ministers have reached an agreement on a European Rescue Plan, (the actual amount has not been provided yet), plus other guaranteed programs. Positive or negative comments regarding this deal could affect euro pairs.
- Coronavirus Updates
Although many world markets are closed, the coronavirus does not take the day off. Over the weekends when updates are given, the markets can’t move because they are closed. However, with forex markets open tomorrow, there is the possibility of volatility around the updates.
Although today is a holiday for most of the world, traders must be careful when placing new trades and where to put stop placements. With light market participation, there is the possibility of some violent fx moves if there are any surprises in the market.
Joe Perry holds the Chartered Market Technician (CMT) designation and has 20 years of experience in the FX and commodities arenas. Perry uses a combination of technical, macro, and fundamental analysis to provide market insights. He traded spot market FX and commodity futures for 17 years at SAC Capital Advisors and Point 72 Asset Management. Don’t forget that you can now follow Forex.com’s research team on Twitter: http://twitter.com/FOREXcom and you can find more of FOREX.com’s research at https://www.forex.com/en-us/market-analysis/latest-research/.
