Author Archive for InvestMacro – Page 45

Coronavirus: Another chance to transform the global food trade

By Rhonda Ferguson, York University, Canada

For the second time this century, the interdependence of the global food supply is in sharp focus. In the first instance, the economic crisis of 2008 created high food prices and pushed an additional 100 million people toward hunger.

For many, though, that crisis neither began nor ended in 2008. Now, amid the COVID-19 pandemic, the fragility of the globalized system of trade in food is apparent again.

In addition to conflict, climate change and impoverishment, COVID-19 threatens 265 million people with famine and billions with food insecurity.

Hunger was on the rise in 2019 before the pandemic began. Despite ongoing calls for change, trade organizations and top food-exporting countries have yet to acknowledge that the current global food trade system is ill-suited to respond to local needs in an increasingly volatile world.

In the years following 2008, Olivier De Schutter, the then-United Nations Special Rapporteur on the right to food, argued that food trade should be restructured around the idea of food as a right — not merely a commodity. He advocated returning decision-making power to communities, investing in agro-ecological practices for our health and environment and moving away from a dependence on food imports.

In short, he argued in favour of transforming a system that was ineffective long before the price increases in 2008 were referred to as a crisis.

The same transformative opportunity is presented to us today.

Full COVID-19 impact still unknown

Encouraging predictable supplies and stable markets are the stated aims of the trade system. But markets are repeatedly destabilized when financial, energy or health challenges emerge.

While the full impact of the pandemic on food security is still unknown, it’s likely to take different shapes around the world.

Harvesters work on a soybean harvest in the state of Mato Grosso, Brazil.
(Pixabay)

The logistical challenges of moving food around the world during the pandemic are exacerbated by the globalized nature of supply chains. Disruptions to planting and harvesting due to illness outbreaks have an impact on food supplies, and restrictions on the movement of migrant farm workers compound the issue as well as reduce worker incomes.

It’s also clear that food availability is easily threatened in a trade system that encourages import dependence and export-oriented agriculture, but cannot require countries to export food.

For example, grain-exporting countries like Russia and Ukraine are restricting exports due to domestic supply concerns. These types of restrictions are detrimental to countries that depend on imported food.

Restrictions also lead to price shocks; even if there’s enough food globally, it becomes inaccessible to many people. Even small price increases can push staple items out of reach. As in 2008, low-income people who spend large portions of their budgets putting food on the table are most affected.

Relying on international markets to balance supply and demand has led to food waste. This problem isn’t new, but it’s more pronounced during the pandemic. Because food production is a slow, seasonal process, it takes time to respond to shifting demands — and communicating demands is complex in long supply chains.

Global South left out

In response to the 2008 price spikes, tools were created to improve market transparency and policy responses in crises. But few countries from the Global South developed or participate in them — and many do not have the capacity to respond to market changes even if information is available to them.

New concerns over animal-to-human virus transmission could also have serious implications in domestic and international trade settings. Countries have curbed access to wet markets where wild animals are sold for the purpose of consumption. But if zoonotic spillover concerns are used to erect new food safety barriers, they’ll impact exporters in the Global South who are already disproportionately burdened by food safety standards set by the north.

It could also affect Indigenous peoples, who face challenges trading and sharing what is known as “country food” because of safety standards set by governments (and aligned with international standards). When food is produced, harvested and consumed locally, communities ensure culturally appropriate safety standards.

Community food security organizations propose policies and undertake activities that are already transforming local food systems. International food agencies are also responding to challenges exacerbated by the pandemic.

WTO opposed to local control over food

The multilateral trade focus has been on minimizing market disruptions, but fails to acknowledge that trade rules can impede local solutions. In fact, World Trade Organization leaders have actively opposed localized control over food systems; they have spoken against food sovereignty and self-sufficiency and failed to resolve disagreements over public stockholding, when developing countries purchase and stockpile food and distribute it to people in need. That’s despite the WTO admissions that food security is a legitimate objective.

The joint statement by the World Health Organization, the United Nations Food and Agriculture Organization and the WTO in March was a minor departure from the otherwise siloed approach to food in trade discussions, where food is positioned as an agricultural commodity, distinct from health, labour and the environment.

Michael Fakhri, the newly appointed Special Rapporteur on the right to food, sees the pandemic as a “warning shot” and says trade must be restructured around food security as climate change intensifies.

IEL Collective Conversation #5: Right to Food with the new UN Special Rapporteur Michael Fakhri.

Fakhri suggests that the right to food can be used as a tool for civil society to engage with trade institutions internationally.

Indeed, transforming trade so that it complements rather than displaces localized food systems is the key to recognizing and honouring the right to food for people all over the world.The Conversation

About the Author:

Rhonda Ferguson, Research Fellow, Dahdaleh Institute for Global Health Research, York University, Canada

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Are rallying stock markets out of step with economic reality?

By George Prior

Buoyant stock markets are not necessarily ignoring alarming economic data, rather they are reflecting the post-pandemic era, affirms the CEO of one of the world’s largest independent financial advisory organizations.

The observation from deVere Group chief executive and founder Nigel Green comes as official figures on Friday revealed that more than 20 million people in the U.S. lost their jobs in April and the unemployment rate more than trebled.

Mr Green comments: “The staggering U.S. unemployment numbers wipe out a decade’s worth of job gains. There’s been nothing like this since the Great Depression.

“Yet U.S. stock futures climbed higher as global markets rose on Friday.  This is highly unusual.”

He continues: “There are two things happening simultaneously here.

“First, a weak first half of 2020 has already been priced-in.

“As have the risks of a potential second wave – but the concerns of this are being largely contained as it is not such a ‘bolt out of the blue’.

“It is extreme uncertainty, the likes of which we saw at the peak of the pandemic, that typically upsets markets.

“Whether they are correct in their assessment remains to be seen, but markets are looking towards the second half of the year.  They appear to believe that there is likely to be a steady economic recovery as key advances are made in coronavirus treatments, as central banks continue to implement and further bolster historic stimulus packages, and as lockdown restrictions around the world are eased to revive activity.”

He goes on to add: “Second, and perhaps more importantly, stock markets are reflecting what is going on in the economy right now and what it’ll look like post-pandemic.

“A closer look at the markets reveals that, of course, not all stocks and sectors are rising equally. They are being driven up across the board by the ‘winners’ of this new era including tech, biotech, home entertainment and established online retailers, amongst others.

“We can assume that these, and other stock market ‘winners’, are showing us what the future economy looks like.”

The deVere CEO concludes: “The optimistic stock markets seem at odds with the grim economic data.  They may be being overly confident, even complacent.

“But it could also be the case that they are giving us clear signals for the current and future shape of the economy, in which there are and will be distinct winners and losers.

“A good fund manager will help investors seek out the opportunities and mitigate potential risks as and when they are presented to generate and build their wealth.”

About:

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.

Forex Technical Analysis & Forecast 08.05.2020

Article By RoboForex.com

EURUSD, “Euro vs US Dollar”

After expanding the consolidation range down to 1.0766, thus finishing this descending wave, EURUSD has completed a new ascending impulse at 1.0853. Possibly, today the pair may start a new correction towards 1.0810 and then form another ascending impulse with the short-term target at 1.0880.

EURUSD
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

GBPUSD, “Great Britain Pound vs US Dollar”

After completing the descending wave at 1.2266, GBPUSD has finished the ascending impulse towards 1.2400. Today, the pair may correct this impulse and reach 1.2333. Later, the market may form the second ascending impulse with the short-term target at 1.2448.

GBPUSD
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

USDRUB, “US Dollar vs Russian Ruble”

After finishing the descending structure at 73.63, USDRUB is expected to consolidate around this level. If later the price breaks this range to the downside, the market may resume trading downwards with the short-term target at 72.50; if to the upside – form one more ascending structure towards 74.00 and then continue the downtrend with the target at 71.30.

USDRUB
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

USDJPY, “US Dollar vs Japanese Yen”

After finishing the ascending impulse at 106.60, USDJPY is consolidating around 106.40. Possibly, the pair may expand the range down to 106.15 and then return to 106.40. If later the price breaks this range to the downside, the market may resume trading inside the downtrend with the target at 105.50; if to the upside – continue the correction to reach 106.80.

USDJPY
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

USDCHF, “US Dollar vs Swiss Franc”

After expanding the range up to 0.9783, USDCHF has finished the descending impulse at 0.9715. Today, the pair may grow towards 0.9750 and then form the second descending impulse with the target at 0.9660.

USDCHF
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

AUDUSD, “Australian Dollar vs US Dollar”

After forming another consolidation range around 0.6455 and breaking it to the upside, AUDUSD has reached 0.6533; right now, it is consolidating close to these highs. According to the main scenario, the price is expected to break the range to the downside and resume falling with the target at 0.6455.

AUDUSD
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

BRENT

Brent is still consolidating around 30.00. The main scenario implies that the price may expand the range down to 28.70 and then return to 30.00. If later the price breaks this range to the downside, the market may resume trading downwards with the target at 27.00; if to the upside – form one more ascending structure towards 38.20.

BRENT
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

XAUUSD, “Gold vs US Dollar”

After breaking 1700.00 and reaching the target of the third wave at 1721.90, Gold is consolidating below this level. Possibly, the pair may correct to return to 1700.00 and test it from above. After that, the instrument may start another growth with the target at 1755.55.

GOLD
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

BTCUSD, “Bitcoin vs US Dollar”

After reaching its upside target at 10000.00, BTCUSD is consolidating above it. Today, the pair may correct to the downside and reach 9500.00. After that, the instrument may resume trading upwards with the target at 9750.00.

BITCOIN
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

S&P 500

The Index continues trading upwards; it has broken the consolidation range to the upside. Possibly, today the pair may reach 2944.2 and then start the second descending impulse towards 2830.5, thus forming a new consolidation range between these two levels. If later the price breaks this range to the upside, the market may resume trading upwards with the target at 3160.2; if to the downside – continue the correction towards 2691.4.

S&P 500

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

Fibonacci Retracements Analysis 08.05.2020 (BITCOIN, ETHEREUM)

Article By RoboForex.com

BTCUSD, “Bitcoin vs US Dollar”

As we can see in the daily chart, the asset is correcting to the upside after completing the previous downtrend. By now, it has reached 61.8% fibo and may yet continue this rising tendency towards 76.0% fibo at 11450.00. However, the tendency may continue only after a slight pullback with the first target at 50.0% fibo at 8880.00.

BTCUSD_D1
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

In the H4 chart, the uptrend has already broken mid-term 76.0% fibo and may continue moving to break the fractal high at 10505.60. At the same time, the MACD indicator is forming a divergence, which hints at a possible pullback. The support is те far from 61.8% fibo at 8000.00.

BTCUSD_H4
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

ETHUSD, “Ethereum vs. US Dollar”

As we can see in the H4 chart, the divergence on MACD made the pair stop growing at 61.8% fibo and start a new correction to the downside. The downside correctional target is 38.2% fibo at 165.90. After completing the correction, ETHUSD may form one more ascending structure towards 76.0% fibo at 241.40 and then the high at 288.98.

ETHUSD_H4
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

The H1 chart shows more detailed structure of the current correction. After reaching 23.6% fibo, the price has formed an internal pullback. Later, after the pullback, the pair may start a new descending wave towards 38.2% fibo at 174.90. However, if the instrument breaks the resistance at 227.46, it may resume the mid-term uptrend.

ETHUSD_H1

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

The Analytical Overview of the Main Currency Pairs on 2020.05.08

by JustForex

The EUR/USD currency pair

Technical indicators of the currency pair:
  • Prev Open: 1.07936
  • Open: 1.08317
  • % chg. over the last day: +0.36
  • Day’s range: 1.08223 – 1.08548
  • 52 wk range: 1.0777 – 1.1494

The EUR/USD currency pair has moved away from local lows. Investors have started partially fixing greenback positions before today’s US labor market report. Experts forecast a decrease in the number of jobs in the US economy by 22.1 million in April. The unemployment rate will reach 16.0%. We recommend paying attention to the difference between the actual and forecasted values. At the moment, EUR/USD quotes are consolidating in the range of 1.0815-1.0855. Positions should be opened from these marks.

The Economic News Feed for 08.05.2020

  • At 15:30 (GMT+3:00), the US labor statistics for April will be published.
EUR/USD

Indicators do not give accurate signals: the price has fixed between 50 MA and 100 MA.

The MACD histogram is in the positive zone, but below the signal line, which gives a weak signal to buy EUR/USD.

Stochastic Oscillator is in the neutral zone, the %K line is below the %D line, which indicates the bearish sentiment.

Trading recommendations
  • Support levels: 1.0815, 1.0775, 1.0750
  • Resistance levels: 1.0855, 1.0885, 1.0925

If the price fixes above 1.0855, further recovery of the EUR/USD currency pair is expected. The movement is tending to 1.0885-1.0925.

An alternative could be a drop in EUR/USD quotes to 1.0780-1.0750.

The GBP/USD currency pair

Technical indicators of the currency pair:
  • Prev Open: 1.23364
  • Open: 1.23508
  • % chg. over the last day: +0.16
  • Day’s range: 1.23498 – 1.24086
  • 52 wk range: 1.1466 – 1.3516

There is an ambiguous technical pattern on the GBP/USD currency pair. The British pound is consolidating. Financial market participants have taken a wait-and-see attitude before today’s report on the US labor market. At the moment, the local support and resistance levels are 1.2350 and 1.2410, respectively. It should be recalled that earlier the Bank of England kept the key marks of monetary policy at the same level. We recommend opening positions from key levels.

GBP/USD

Indicators do not give accurate signals: the price has fixed between 50 MA and 100 MA.

The MACD histogram has moved into the positive zone, indicating the bullish sentiment.

Stochastic Oscillator is in the neutral zone, the %K line is below the %D line, which gives a signal to sell GBP/USD.

Trading recommendations
  • Support levels: 1.2350, 1.2310, 1.2270
  • Resistance levels: 1.2410, 1.2445, 1.2485

If the price fixes above 1.2410, GBP/USD quotes are expected to rise. The movement is tending to 1.2450-1.2490.

An alternative would be a decrease in the GBP/USD currency pair to 1.2310-1.2260.

The USD/CAD currency pair

Technical indicators of the currency pair:
  • Prev Open: 1.41433
  • Open: 1.39758
  • % chg. over the last day: -1.23
  • Day’s range: 1.39250 – 1.39891
  • 52 wk range: 1.2949 – 1.4668

There are aggressive sales on the USD/CAD currency pair. During yesterday’s and today’s trading sessions, the drop in quotes exceeded 200 points. The trading instrument has set new local lows. The loonie is supported by price recovery in the “black gold” market. At the moment, the USD/CAD currency pair is consolidating in the range of 1.3925-1.3975. Investors expect important economic reports from the US and Canada. Positions should be opened from key levels.

At 15:30 (GMT+3:00), statistics on Canada’s labor market will be published.

USD/CAD

Indicators signal the power of sellers: the price has fixed below 100 MA.

The MACD histogram is in the negative zone, indicating the bearish sentiment.

Stochastic Oscillator is in the neutral zone, the %K line is above the %D line, which gives a signal to buy USD/CAD.

Trading recommendations
  • Support levels: 1.3925, 1.3890, 1.3850
  • Resistance levels: 1.3975, 1.4010, 1.4050

If the price fixes below the support level of 1.3925, a further drop in USD/CAD quotes is expected. The movement is tending to 1.3880-1.3850.

An alternative could be the growth of the USD/CAD currency pair to 1.4020-1.4050.

The USD/JPY currency pair

Technical indicators of the currency pair:
  • Prev Open: 106.083
  • Open: 106.275
  • % chg. over the last day: +0.12
  • Day’s range: 106.220 – 106.461
  • 52 wk range: 101.19 – 112.41

The USD/JPY currency pair is consolidating. There is no defined trend. Financial market participants expect a report on the US labor market for April. At the moment, USD/JPY quotes are testing local support and resistance levels: 106.20 and 106.45, respectively. We also recommend paying attention to the dynamics of US government bonds yield. Positions should be opened from key levels.

USD/JPY

Indicators do not give accurate signals: the price has fixed between 50 MA and 100 MA.

The MACD histogram is near the 0 mark.

Stochastic Oscillator is in the neutral zone, the %K line is below the %D line, which indicates the bearish sentiment.

Trading recommendations
  • Support levels: 106.20, 106.00
  • Resistance levels: 106.45, 106.65, 106.85

If the price fixes above 106.45, USD/JPY quotes are expected to rise. The movement is tending to 106.70-107.00.

An alternative could be a decrease in the USD/JPY currency pair to 105.80-105.60.

by JustForex

Investors Have Started Fixing Positions on the Greenback. US Labor Market Report Is in the Spotlight

by JustForex

The American currency has been declining. The US dollar index (#DX) closed in the negative zone (-0.23%) yesterday. Financial market participants have started partially fixing positions on the US dollar before today’s labor market report. Experts forecast a decrease in the number of jobs in the US economy by 22.1 million in April. The unemployment rate will reach 16.0%. We recommend paying attention to the difference between the actual and forecasted values.

Yesterday, the Bank of England meeting took place, during which the key interest rate was not changed and remained at the level of 0.10%. According to the regulator, the UK economy expects the largest recession in 300 years due to the COVID-19 pandemic. The Bank of England predicts a sharp decline in GDP this year. According to forecasts, the economy will decline by 30% in the first six months of 2020. Economic recovery is expected no earlier than mid-2021. The crisis caused by the pandemic also affects the growth in unemployment. As reported by the Bank of England, this indicator will more than double and exceed 9% in 2020.

The “black gold” prices continue to recover in the hope of rising demand after more and more countries announce quarantine easing. Currently, futures for the WTI crude oil are testing the $24.15 mark per barrel.

Market indicators

Yesterday, there was the bullish sentiment in the US stock market: #SPY (+1.21%), #DIA (+0.87%), #QQQ (+1.29%).

The 10-year US government bonds yield has risen again. At the moment, the indicator is at the level of 0.70-0.71%.

The news feed on 2020.05.08:
  • – Statistics on the US labor market at 15:30 (GMT+3:00);
  • – Employment change in Canada at 15:30 (GMT+3:00).

by JustForex

After a horrific ADP: will NFP’s push the USD/JPY towards 105.00?

By Admiral Markets

Source: Economic Events May 8, 2020 – Admiral Markets’ Forex Calendar

On Friday, the eyes of traders around the world will be certainly on the Non-Farm Payrolls or NFP’s.

That is particularly true, as after Wednesday’s ADP data showed that private businesses in the US fired 20.2 million workers in April due to the Corona lockdown, but only slightly above market expectations at 20 million.

It was the biggest decline ever, and since ADP is usually a good indication for the Non-Farm Payrolls, it is certainly fair to assume that the market consensus at -21.5 million is probably not that far off.

Not surprisingly, the USD/JPY has already taken on bearish momentum, heading for a test of the region around 106.00 over the last days since it underlines one aspect of the last Fed statement and the willingness of the Fed to take further monetary action in a worsening economic situation.

While we certainly don’t know how much of such a worsening economic situation was already priced into the Fed assumptions, it seems certainly fair to assume we should expect further monetary stimulus from the US central bank with ongoing bad economic projections, especially from the US labour market, putting further pressure on US yields, making a rather sooner than later a test of the region around 105.00 likely and even a drop lower.

Technically the picture only brightens slightly, if the currency par recaptures 107.80/108.00:

Source: Admiral Markets MT5 with MT5-SE Add-on USD/JPY Daily chart (between March 15, 2019, to May 7, 2020). Accessed: May 7, 2020, at 10:00pm GMT – Please note: Past performance is not a reliable indicator of future results, or future performance

In 2015, the value of the USD/JPY increased by 0.5%, in 2016, it fell by 2.8%, in 2017, it fell by 3.6%, in 2018, it fell by 2.7%, in 2019, it fell by 0.85%, meaning that after five years, it was down by 9.2%.

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By Admiral Markets

Junior Gold Miners Ready To Run

By TheTechnicalTraders 

– Both Gold and Silver Futures have been struggling to rally above recent high levels since the start of the global stock market collapse related to the COVID-19 virus event.  Yet, the Junior Gold Miners appear to be telling us the Precious Metals market is boiling hot.

Gold, the bell-weather safe-haven asset, initially collapsed when the US stock market started the massive selloff in late February 2020, then recovered to higher price levels near $1785 recently.  Since reaching these levels, Gold has stalled into a sideways price flag near major resistance.

Silver, on the other hand, is trading near $15.60 and has yet to really recover to anywhere near the levels it had achieved in early January 2020 (near $18.60).

Well, GDXJ, the Junior Gold Miners ETF, is suggesting a very strong price rally is taking place that may push both Gold and Silver substantially higher.  Key resistance exists near $46.50.  Once broken we believe a very strong price rally will take place pushing GDXJ price levels to $51 or $52.  After that, a brief downside rotation will potentially retest the $47 to $48 levels before an even bigger upside rally takes place.  What is even more important is that we believe this big breakout move could start as early as next week, May 12th or after.

Before you continue, be sure to opt-in to our free market trend signals
before closing this page, so you don’t miss our next special report & signal!

GDXJ Daily Chart

This GDXJ Weekly chart highlights the same price pattern and shows why we believe the upside price breakout could be a massive new trend.  The Deep price low setup because of the COVID-19 virus event creates a very big price range for any future price advancements.  That $24 price range, if applied to price levels before the breakdown event near $41, may suggest GDXJ could rally to levels above $65 over the next few weeks or months.

GDXJ Weekly Chart

Concluding Thoughts:

We believe the upside rally in both Gold and Silver recently is a very good indication that the sideways price channel that has plagued precious metals recently may be ending.  If precious metals prices begin to rally, then GDXJ will break the upper $46.50 resistance level and begin a new upside price rally clearing the resistance setup before the virus event began.

Get ready, this could be a very big move higher for Junior Miners and it could align with our May 8th through May 12th global market inflection point prediction.

If you are using our free public research for your own trading decision-making and/or using it as an opportunity to find and execute successful trades, please remember you are the one ultimately making the decisions to trade based on our interpretation and free research posts.  We, as technical traders, will continue to post new research articles and content that we believe is relevant to the current market setups.

If you want to improve your accuracy and opportunities for success, then we urge you to visit TheTechnicalTraders.com to learn how you can enjoy our research and our members-only trading triggers (see the first chart in this article).  If you are managing your retirement account or 401k, then we urge you to visit www.TheTechnicalInvestor.com to learn how to protect your assets and grow your wealth using our proprietary longer-term modeling systems.  Our goal is to help you find and create success – not to confuse you.

Our researchers will generate free research on just about any topic that interests them.  As technical traders, we follow price, predict future price moves, tops, bottoms, and trends, and attempt to highlight incredible setups that exist on the charts.  What you do with it is up to you.  Visit www.TheTechnicalTraders.com/FreeResearch/ to review all of our detailed free research posts.

In closing, we would like to suggest that the next 5+ years are going to be incredible opportunities for skilled traders.  Remember, we’ve already mapped out price trends 10+ years into the future that we expect based on our advanced predictive modeling tools.  If our analysis is correct, skilled traders will be able to make a small fortune trading these trends and Metals will skyrocket.  The only way you’ll know which trades to take or not is to become a member.

Chris Vermeulen
Chief Market Strategist
TheTechnicalTraders.com

 

Coronavirus effect on trading

For many forex traders, whether experienced or amateur, the risk is inevitable and comes in different forms. Many factors affect the trading market.

Not many people expect that a health crisis will affect the forex and financial market. However, Coronavirus has taken the world by storm and influenced the financial market across the globe.

The virus, also called COVID-19, was first reported in December 2019. To date, the virus has claimed over 2,100 lives. It has been estimated that more than 75,000 people are now infected with this deadly virus.

Photo by engin akyurt

What Is Coronavirus?

The Coronavirus was first reported in the Chinese city of Wuhan in December 2019. It is officially known as COVID-19. People infected with the virus exhibit various symptoms, including a cold or pneumonia. The mortality rate is estimated at 2%, while China is trying to contain it. Some cities, such as Wuhan, are isolated while patients are quarantined.

Although Coronavirus mainly affects the Chinese population, it is spreading to other parts of the world. On January 20, 2020, more cases were reported outside of China, including in Thailand, South Korea, and Japan.

Subsequently, on the 30th of that month, the World Health Organization declared the virus a global health crisis. Therefore, what does all this have to do with the Forex market?

The Impact Of The Coronavirus On Trading

The impact of Coronavirus on the forex market can be viewed from different angles. China is probably one of the world’s economic giants. The value of the Coronavirus in the national economy still cannot be ignored.

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According to several economists, including a survey by Reuters, in the first four months of 2020, the country’s annual economic growth will decline. It has been estimated that this has indeed happened, with figures ranging from about 6.0% to 4.5%. After the change, some sectors also experienced negative changes, such as Apple stock prices, which went down after the Coronavirus outbreak.

Although the spread of the virus is expected to be kept to a minimum, the economic impact may be more tangible if the virus continues to spread. There are concerns that after China’s protracted trade war with the U.S., doubled with the spread of Coronavirus, the economy will probably not survive.

As this virus continues to spread to other Asian countries, it is expected that they, too, will suffer adverse consequences for their economies.

China’s Financial Market

China closed its markets during the Lunar New Year, and this period was extended until February 2 this year. However, after the extension, the market was reopened, and before that happened, the Central Bank of China announced an injection of 1.2 trillion Chinese yuan as liquidity. The market experienced further changes, including the suspension of over-the-counter trading to avoid forced selling. The Shanghai index fell to 10%.

Against the background of cancellation and suspension of flights to China by such significant airlines as Lufthansa and British Airways, China’s economy plunged into an abyss. Many major companies, such as Hyundai, have suspended some of their operations because of the problems they face.

Hyundai, for example, could not get spare parts from China, as a result of which some plants in South Korea were shut down.

In connection with these events caused by the outbreak of the epidemic, experts estimated a decrease in GDP by 0.5-1% in case the Coronavirus would peak in February or March.

The impact of these events on Chinese financial markets should not be underestimated. USD/CNH is trading higher and is expected to move even higher. It is anticipated that USD/CNH might face a holding of 7.0000 if the virus is contained.

Impact On Global Value Chains

During the past two decades, China has played a crucial role in the world economy. China’s growing importance in the world economy is not only due to its status as a producer and exporter of consumer goods.

China has become a significant supplier of intermediate resources for manufacturers abroad. Today, about 20% of world trade in intermediate products is produced in China (compared to 4% in 2002).

It is believed that any significant supply disruption in China in these sectors has a significant impact on producers throughout the rest of the world.

Indeed, many companies around the world fear that the measures introduced to curb COVID-19 (i.e., restrictions on economic activity and on the production of intermediate goods) are being implemented.

Impacted Countries

A reduction in China’s supply of intermediate inputs may affect the production capacity and therefore, exports of any country, depending on how dependent its industry is on Chinese suppliers.

For example, some European car manufacturers may face a shortage of critical components. Japanese companies may also find it challenging to obtain the parts needed to assemble digital cameras.

For a lot of companies, the limited use of inventories as a result of a lean and timely production process will lead to shortages that will affect their production capacity and total exports.

In general, the countries most affected will be the European Union (engineering, automotive and chemical), the United States (engineering, automotive and precision instruments), Japan (engineering and automotive), and the Republic of Korea (communications equipment and facilities), as well as Taiwan Province of China (communications equipment and office equipment).

Other Markets

While the financial markets of China and other Asian countries are becoming disorderly, some markets are winning. Safe currencies, including the Japanese yen, Swiss franc and U.S. dollar, continue to thrive.

These currency markets continue to gain support, while the Euro is slightly behind, with limited assistance. The commodity market is the worst hit. Commodity currencies like the Australian dollar are in danger, while the sterling pound is becoming vulnerable at a slower rate, especially if the global economy eventually slows down.

Photo by Austin Distel

Crude Oil And Change In Market Prices

The influence of Coronavirus is felt not only in China but also indirectly, in other markets. Looking at light crude oil, one can see the influence.

While crude oil prices fell after Iran attacked U.S. bases in Iraq, it is clear that after the Coronavirus outbreak, about three weeks later, prices fell from an estimated 65.65 to a low of 52.13.

We cannot ignore the fact that China and the U.S., which signed the deal, kept the price of crude oil at 58.00 for a while. However, Coronavirus is slowly gaining momentum. If the outbreak continues, especially in China, the demand for crude oil is predicted to decline and then decline further.

Although Norway has not reported any deaths or infections from Coronavirus, it has been affected by the value of its Coronavirus infection. Since December, the prices of U.S. dollars for Norwegian Krone have fallen, and this was due to the demand for crude oil.

Norway exports crude oil and, therefore, changes in oil prices directly affect the price of the Krone.

With lower demand for oil, it looks like USD-NOK will rise, and if held down, oil rates will rise, and therefore USD-NOK will move even lower than at present in the market.

Photo by Austin Distel

To Sum Up

While there is still uncertainty regarding the impact of COVID-19 on China’s productive capacity, recent statistics indicate a significant decline. The full implications of COVID-19 on global value chains will become more evident in the coming months.

One crucial question, however, is how interruptions in the supply of intermediate inputs from China will affect the rest of the world.

The Coronavirus has also affected financial markets around the world, and it remains to be seen how much damage can be done or avoided.

It all depends on whether this virus is in the body or not. If governments can stop an outbreak like SARS, the expected extreme negative impact on trade can be avoided.

Author’s bio: 

Dmitrii B. is the founder of GRIN tech – full-service agency.

 

Remdesivir explained – what makes this drug work against viruses?

By Katherine Seley-Radtke, University of Maryland, Baltimore County

With the FDA approving Gilead’s Remdesivir as an emergency use treatment for the most acute cases of COVID-19, many people are wondering what type of a drug it is.

Remdesivir is a member of one of the oldest and most important classes of drugs – known as nucleoside analogue. Currently there are more than 30 of these types of drugs that have been approved for use in treating viruses, cancers, parasites, as well as bacterial and fungal infections, with many more currently in clinical and preclinical trials.

I am a medicinal chemist who has worked in design and synthesis of these important drug treatments for over 30 years. I have written numerous reviews over the years about these drugs and their structure and function, and as a result have had many inquiries lately from friends, family and others not in the field asking me to explain what exactly is it about Remdesivir that makes it so effective, but also why it is so interesting. Understanding why means digging into the biochemistry of this class of drugs.

Fake genetic building blocks

The reason nucleoside analogues and a similar group called nucleotide analogues are so effective is that they resemble the naturally occurring molecules known as nucleosides – cytidine, thymidine, uridine, guanosine and adenosine. These are the essential building blocks for the DNA and RNA that carry our genetic information and play critical roles in our body’s biological processes.

Slight differences in the chemical structure of these analogues from naturally occurring compounds make them effective as drugs. If an organism like a virus incorporates a nucleoside analogue into its genetic material, rather than the real thing, even small changes to the structure of these building blocks prevent the regular chemistry from happening and ultimately foils the ability of the virus to replicate.

The basic structure of a nucleoside includes a sugar group and a base (A, C, G, T or U), and in the case of a nucleotide, a group containing a phosphate which is a collection of oxygen and phosphorus atoms.

The first nucleoside analogues were approved for medicinal use in the 1950s. The early nucleosides had only simple modifications, typically either to the sugar or the base, while today’s nucleosides, such as Remdesivir, typically have several modifications to their structure. These modifications are essential to their therapeutic activity.

How does Remdesivir work as antiviral therapeutic?

This activity occurs because nucleoside/tide analogues mimic the structure of a natural nucleoside or nucleotide such that they are recognized by, for example, viruses. Due to those structural modifications, however, they stop or interrupt viral replication, which stops the virus from multiplying and infecting more cells in the body.

As a result, they are known as direct-acting antivirals, and this is the case for Remdesivir, which works by blocking the coronavirus’s RNA polymerase – one of the key enzymes that this virus needs to replicate its genetic material (RNA) and proliferate in our bodies. Remdesivir works when the enzyme replicating the genetic material for a new generation of viruses accidentally grabs this nucleoside analogue rather than the natural molecule and incorporates it into the growing RNA strand. Doing this essentially blocks the rest of the RNA from being replicated; this in turn prevents the virus from multiplying.

The drug Remdesivir is basically an altered version of the natural building block adenosine – which is essential for DNA and RNA. Comparing the structure of Remdesivir with adenosine, one can see there are three key modifications that make it effective.

The first is that Remdesivir, as it is administered, is not the actual active drug; it is actually a “prodrug,” meaning it must be modified once in the body before it becomes an active drug. Prodrugs are used for many reasons, including protecting a drug until it reaches its site of action. The active form of Remdesivir contains three phosphate groups; it is this form that is recognized by the virus’s RNA polymerase enzyme.

A naturally occurring nucleotide (left) which is a building block of RNA and DNA and Remdesivir (right) which is a variation on its natural counterpart.
Katherine Seley-Radtke, CC BY-SA

The second important modification on Remdesivir is the carbon-nitrogen (CN) group attached to the sugar. Once Remdesivir is incorporated into the RNA growing chain, the presence of this CN group causes the shape of the sugar to pucker, which, in turn, distorts the shape of the RNA strand such that only three more nucleotides can be added. This terminates the production of the RNA strand and is what ultimately sabotages the replication of the virus.

The third important structural feature which makes Remdesivir differ from adenosine is the change of one particular chemical bond on the molecule. Rather than a bond linking a carbon and nitrogen atoms, chemists replaced the nitrogen with another carbon, creating a carbon-carbon bond. This is critical to the success of this drug because coronaviruses have a special enzyme that recognizes unnatural nucleosides and clips them out. But by changing this chemical bond, Remdesivir cannot be removed by the enzyme, allowing it to stay in the growing chain and block replication.

Remdesivir trials

Remdesivir originally was found during a drug discovery program at Gilead to search for inhibitors of the hepatitis C virus, which is another RNA virus. Although Gilead ultimately selected a different nucleoside analogue for treatment of hepatitis the company tested the drug to see if it was effective against other RNA viruses. Remdesivir exhibited potent activity against Ebola and Middle Eastern respiratory virus, among others.

Now the drug is being tested against the SAR-CoV-2 virus in the first clinical trial launched in the United States.

According to the NIH, patients who received Remdesivir had a faster recovery compared to those who received placebo; 11 days compared with 15 days for those who received the placebo. “Results also suggested a survival benefit, with a mortality rate of 8.0% for the group receiving Remdesivir versus 11.6% for the placebo group,” according to the NIH press release.

While these results are preliminary, there are a plethora of clinical trials underway across the world. Regardless, a certain amount of caution is still needed. As noted by Dr. Anthony Fauci on NBC’s “Today” show, “the antiviral drug Remdesivir is the first step in what we project will be better and better drugs coming along” to treat COVID-19, but cautioned, “This is not the total answer.”

I share this view with many other scientists in the field. No matter what those results ultimately show, Remdesivir will mostly certainly be part of a cocktail of drugs, just as is standard for treating other viruses such as HIV and hepatitis C.

A combination, or cocktail, of drugs will provide a more effective and more complete therapy that blocks the virus from replicating. The other benefit of such a drug cocktail is that it lowers the chance the virus will develop resistance to the therapy. In the meantime, these early results for Remdesivir are proving to be an important source of hope for many of us across the world as we wait for this pandemic to subside.

About the Author:

Katherine Seley-Radtke, Professor of Chemistry and Biochemistry and President-Elect of the International Society for Antiviral Research, University of Maryland, Baltimore County

This article is republished from The Conversation under a Creative Commons license. Read the original article.