Price war in the oil market | 27 March 2020

#WTI:

Saudi Arabia and Russia kicked off a price war and the coronavirus pandemic destroyed demand for hydrocarbons. We are expecting a change in the downtrend in the oil market. The United States is sending a special representative to negotiate with Saudi Arabia. Saudi Arabia and Russia are locked in a war for global oil market share after their three-year deal to restrain output collapsed this month. The kingdom has vowed to increase production to a record 12.3 million barrels per day, and has chartered numerous tankers to ship oil around the world. White House believe Saudi Arabia's move to flood oil markets compounds the global economic crash during a crisis caused by the pandemic. The hope is that President Donald Trump could negotiate with Saudi Arabia and Russia and convince them to match cuts with a similar cut in production in Texas. This is a positive signal for the market!

Trading recommendation: Buy 21.10 and take profit 25.00

#SP500:

The Federal Reserve is increasing its stimulus programs which will have a positive impact on the dynamics of the stock market. The Federal Reserve Bank of New York will target purchases of at least $100 billion for the week spanning March 23, 2020 to March 27, 2020 and will release a schedule each day for the next day’s operations. On Monday March 23, 2020, the Desk will conduct $40 billion in purchases, across 4 operations, for settlement dates noted below. These purchases are designed to support the smooth functioning of the agency MBS market. The Desk stands ready to conduct more purchase operations in the coming days should this be appropriate to promote smooth market functioning.

Trading recommendation: Buy 2100 and take profit 2350

XAUUSD:

In recent days, the Federal Reserve has taken emergency measures to shore up the U.S. economy during the coronavirus pandemic, slashing interest rates and resurrecting 2008-crisis era programs to boost liquidity, including reprising its so-called quantitative easing program. To support the smooth functioning of markets for Treasury securities and agency mortgage-backed securities that are central to the flow of credit to households and businesses, over coming months the Committee will increase its holdings of Treasury securities by at least $500 billion and its holdings of agency mortgage-backed securities by at least $200 billion. This is a positive signal for the precious metals market. Investors increase their long positions in gold during the QE period.

Trading recommendation: Buy 1480 and take profit 1525.