CoronaVirus and financial markets
One of the main reasons for the sharp sell-off with the news of coronavirus is because of the mysticism tag attached with the disease.
The contagious nature of disease has been affecting the financial markets with every revision of the death toll and the number of people affected.
The fact that the virus has originated from China which is one of the financial powerhouses of the globe has added to the misery.
The trend since the last one week is Investor sell off in Asia and the markets re-bound and Europe and US.
Gold and US Dollar and to an extent JPY has been gaining from this fiasco.
So what currencies should one focus on to get the most out of the Volatility?
AUDJPY – has lost 200+ pips and opened this week on the downside with a gap. The forecast by the traders is that AUDJPY should settle down near 70 psychological level, considering the overall global outlook.
Bitcoin – surprisingly has jumped from $8000 to $9000 since the Coronavirus was announced.Investors have not shown so much interest in the yellow metal in comparison to the crypto asset. Bitcoin is reacting when safe havens are sought out.
China A50 index was badly affected due to the CoronaVirus epidemic dropping nearly 2000 points mostly in the Asian session.
Oil – The price of oil fell amid fears that the virus would dampen demand for fuel.China’s appetite for oil has grown at around 5.5 percent annually, making it an important buyer in the global market. The country has already imposed travel restrictions and any extension could further dampen demand.
The markets will be interesting to watch as the CoronaVirus fear spreads and we can use tools like volatility and volume to plan our next trade!