Bearish Scenario: Sales below 78.99 with TP1: 77.93, TP2: 77.45, and upon its breakout TP3: 76.56 and TP4: 75.70 Bullish Scenario: Purchases above 78.00 (wait for a pullback to this area) with TP1: 1679.00 (uncovered POC*), TP2: 79.33, and TP3: 79.66 intraday
Coronavirus: three scenarios
2020-03-16 • Updated
Coronavirus is a so-called “black swan” – an event no one could have predicted that is making a great impact on the global economy and financial markets. The virus represents a major uncertainty: it’s not really clear now how the situation will develop in the future. To make sense of the different factors, we outlined the three potential outcomes. The publication is based on the materials of McKinsey and Bloomberg.
1. Mild scenario
What will happen?
China will be the main victim of the virus. Elsewhere, the spreading of the disease will be effectively stopped. In China itself, there will be no second wave of the epidemic. Fiscal and monetary support will help to diminish the economic damage. McKinsey and Bloomberg point out that in this case Chinese production will recover by the end of March in the major part of the county. The crisis in the Hubei province, however, may last until the middle of the second quarter.
Chinese economy will lose less than 1% of its annual growth, while the global growth will diminish only by a fraction of percent. The demand for fuel will recover in the Q2 helping oil prices go up.
2. Scenario of medium gravity
What will happen?
Pandemic will keep on, but the authorities of various countries will follow China’s example and impose restrictions on travelling and communication. Some countries may have to deal with China-like extent of the health crisis.
This will slice 1-2% off global GDP growth in 2020. The recovery will start in the third quarter. Air transportation and tourism will be hit hard and won’t be able to return to the normal state until the year-end. Oil prices will remain low.
3. Hard scenario
What will happen?
More self-sustained virus areas will appear all over the world. This will happen if the coronavirus turns out not to be just seasonal, but continues spreading in the north hemisphere during summer.
Annual GDP growth will be either minimum – 0.1%-1% ( McKinsey) or zero (Bloomberg). In 2020, the global GDP will lose about $2.7 trillion. This is comparable with the losses of 2008-2009.
What does it all mean for traders?
First of all, don’t panic. Make sure that you take the necessary precautions: wash hands, don’t touch face, avoid public places. As for trading, do technical and fundamental analysis carefully. There are a lot of swings in price from which traders can benefit. Good thing is that for trading you don’t need to leave home: everything can be done online.
Bearish Scenario: Sales below 80.00 with TP1: 79.34, TP2: 78.94, TP3: 78.55, and 78.00 Bullish Scenario: Buys above 78.00 (wait for a retracement to the zone) with TP: 79.34 TP2: 80.00, and TP3: 81.00
Amid uncertainty driven by geopolitical events, oil prices surged to record highs. However, a correction in oil prices is observed with a gradual improvement in the situation in the Middle East and an increase in demand. The question facing investors is whether there are prerequisites for further price growth or if everything depends on the dynamics of the political landscape. In this article, we will explore the impact of recent events on the global oil market and the prospects for developing this crucial commodity sector.
Last Tuesday, the Australian dollar experienced its steepest drop of the year, falling by 1.18%, following higher-than-expected US inflation figures, which boosted the US dollar. However, the Aussie has since rebounded and is now trading at a two-week high against the US dollar. Investors are...
Commerzbank's analysis suggests a brighter outlook for the New Zealand Dollar (NZD) in the coming months despite recent downward pressure. Factors like broader U.S. Dollar strength and domestic issues have kept the NZD below last year's highs. However, robust labor markets in both New Zealand and Australia and an expected...
What causes the yen to fall, and how does it behave against the USD, EUR, and AUD