CODVID-19: What could be the circuit breaker?

As always when we see volatility ramp up, we look for a circuit breaker and a response to calm market nerves. Perhaps the most obvious circuit breaker would be signs that the virus is contained in China and the fears of an outbreak in Europe and wider Asia are overblown.

China recovery – watch this Saturday’s China manufacturing and services PMI as key event risks, where a sizeable slowdown is expected. The circuit breaker can be if the economic data, specifically that of China’s data flow, proves to be less bad than feared.

XAU/USD is a clear circuit breakers as we look a this chart:

Central banks – Interest rate cut expectations have increased and it’s a coin toss if the Fed cut in April. If we see the S&P 500 break 3214 then expect the market to express disappointment if the Fed doesn’t move in alignment to market pricing.

Fiscal stimulus – Trump will not want a falling equity market into the US election and will say all the right things to prop up the markets. This may include a punchy stimulus. We are already hearing signs that Germany and other EU nations may follow suit. Expect Korea and Japan to also offer fiscal stimulus – will this be enough to please the market if economics are truly threatened?

Ready to trade?

It’s quick and easy to get started – even with a small deposit. Apply in minutes with one of our partner exchanges.

We recommend you to start with https://pepperstone.com and https://binance.com. They have a very simple application process.

Once you have set up your account with them, login to https://brozbot.com and create your trading bots to operate on your behalf!