Index

HOW TO TRADE 2020 BITCOIN HALVING Leading up to and following a Bitcoin halving, markets frequently witnessed high periods of volatility. However, price swings may be tamed by traders who have priced in the anticipated change and positioned themselves ahead of it. Since Bitcoin’s inception in 2009, there have been two halvings occurring at four-year intervals – on November 28, 2012 and July 9, 2016. Bitcoin prices rose approximately 18 percent in the month before the halvings of 2012 and 2016. They added an additional 8 percent after the first instance but fell 16 percent following the second one. Volatility this year may be particularly difficult to gauge because of two opposing forces that could amplify or dampen high-magnitude price swings.

US DOLLAR ASEAN WEEKLY RECAP The US Dollar mostly aimed higher this past week against ASEAN currencies such as the Singapore Dollar, Malaysian Ringgit and Philippine Peso. It lost ground however to the Indonesian Rupiah, resulting in an overall down week for my ASEAN-based US Dollar index. Weakness in the haven-linked Greenback notably slowed as of late despite a cautiously optimistic mood on Wall Street as equities rose over the past 5 days. The resilience in the Rupiah comes amid upbeat commentary from Bank of Indonesia’s Governor Perry Warjiyo who mentioned last week that intervention needs “have been largely reduced”. As I mentioned prior, the USD continued to focusing on external developments to find direction against currencies in the developing Asia Pacific region. This will likely continue being the case in the week ahead. LAST WEEK’S US DOLLAR PERFORMANCE US Dollar Fundamental Outlook: SGD, IDR, MYR, PHP Focus on Earnings ASEAN-Based US Dollar Index averages USD/SGD, USD/IDR, USD/MYR and USD/IDR Confirmed coronavirus case growth in Singapore, Malaysia, Indonesia and the Philippines has been slowing on average. The weekly chart below overlays these cases alongside my ASEAN-based US Dollar index. The latter averages USD against SGD, MYR, IDR and PHP. This is also following the cautious easing in global reports such as in countries like the United States, Italy and France.

CANADIAN DOLLAR, CRUDE OIL, US DOLLAR, STOCKS, EARNINGS - TALKING POINTS: Canadian Dollar down as crude oil, stocks drop to start the week Anxiety ahead of key Q1 earnings reports maybe risk-off catalyst US Dollar buoyed by haven demand, anti-fiat gold prices lower The Canadian Dollar led the way lower among its G10 FX counterparts financial markets started the trading week in a defensive mood. Bellwether S&P 500 futures fell – pointing to a broadly risk-off disposition – as financial markets. Crude oil prices sank to the lowest level since 2001, which probably explains some of the Loonie’s outsized losses. The haven US Dollar traded broadly higher, pressuring anti-fiat gold prices. Investors’ dour disposition may reflect anxiety ahead of a busy week for corporate earnings report that look set to paint a bleak picture of the damage wrought by the coronavirus outbreak. Perhaps most worryingly for cyclical assets like stocks and commodity-linked currencies, early signs of stabilization in the Covid-19 infections tally may be shifting the markets’ focus to the outbreak’s long-term economic impact.

AUD/USD RATE RETAINS ASCENDING CHANNEL FORMATION AHEAD OF RBA MINUTES AUD/USD continues to track the upward trending channel carried over from the previous month as the Reserve Bank of Australia (RBA) abandons the dovish forward guidance for monetary policy, and the minutes from the April meeting may heighten the appeal of the Australian Dollar if the central bank tames speculation for additional monetary support. The update to Australia’s Employment report may encourage the RBA to adopt an improved outlook as the economy unexpectedly adds 5.9K jobs in March, and Governor Philip Lowe and Co. may continue to change their tune over the coming months as officials insist that “smaller and less frequent purchases of government bonds will be required” if market conditions continue to improve. The unprecedented efforts taken by monetary and well as fiscal authorities should help to curb the slowdown in economic activity, but the RBA may come under pressure to further support the economy as the International Monetary Fund (IMF) sees global growth contracting 3.0% in 2020.

MAJOR OIL TRADER’S COLLAPSE, RISK APPETITE. TALKING POINTS: Oil trading giant Hin Leong has filed for bankruptcy protection Markets are now weighing the exposure of its lenders Energy prices’ collapse seems to have claimed a major player In every major crisis there comes a point at which weakening economic numbers translate into corporate scalps and the nodal Singapore energy market has reached that point. Its biggest oil trading firm Hin Leong Trading has filed for bankruptcy protection, seeking to restructure nearly $4 billion in debt. If course, the energy sector has taken an unprecedent hit. The coronavirus has shredded energy-demand forecasts even as major producers saturate the market with cheap oil. Oil prices have collapsed to lows not seen since 2001, even after major production cuts which have so far done nothing to revive it.

EURO TECHNICAL PRICE OUTLOOK: EUR/USD WEEKLY TRADE LEVELS Euro updated technical trade levels & sentiment – Weekly Chart EUR/USD in consolidation within April monthly opening-range Critical support at 1.0657 – breach above 1.1187 needed to shift broader focus higher.

Also, the DXY Index appears to have found technical support around the 99.00 price level, which is highlighted by the confluence of its 50-day simple moving average, October 2019 swing high, and mid-point retracement of last month’s bullish leg. From a fundamental perspective, the latest coronavirus developments have likely rekindled demand for safe-haven currencies and US Dollar dominance. Specifically, investor risk appetite soured on the back of news that several countries are prolonging their coronavirus lockdown.

Market participants have already started to show signs that their recent influx of coronavirus optimism has waned. This is indicated by a pop in the VIX Index, or ‘fear-gauge,’ which happens to mirror a spike in implied currency volatility. Ominously, the recent uptick in expected FX volatility and S&P 500 volatility seems to resemble the volatility explosion traders witnessed throughout February and March.

A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +1.72 (63.26% of traders are long) – bearishreading Long positions are 17.19% lower than yesterday and 1.10% higher from last week Short positions are 0.21% higher than yesterday and 38.94% higher from last week We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week and the recent changes in sentiment warn that the current Gold price trend may soon reverse higher despite the fact traders remain net-long.

Technical Outlook: In my last Gold Price Outlook we noted that the XAU/USD rally was vulnerable heading into the close of March trade and that, “ultimately a larger pullback may offer more favorable entries with a breach of the highs needed to keep long-bias viable.” Price plummeted more than 5% to register a low at 1560 before ripping to fresh yearly highs into the April open. The advance failed at slope resistance this week with price unable to mount a daily close above the 78.6% retracement of the decline from the record highs at 1733. Initial daily support rests at the March high-day close at 1678 backed by the median-line / 38.2% retracement of the yearly range at 1633- look for a larger reaction there If reached. Key support / bullish invalidation now rests at 1564/85.

Notes: A closer look at Gold price action sees XAU/USD trading within the confines of an ascending pitchfork formation extending off the March lows. A reversal off the upper parallel has price testing the weekly opening-range lows / median-line in early New York trade on Friday- look to the break for guidance with the broader advance at risk sub-1732 into the close of the week. A topside breach / close above the weekly highs needed to fuel the next leg higher in price with such a scenario eyeing subsequent resistance objectives at the 2012 high at 1795

EURO TECHNICAL PRICE OUTLOOK: EUR/USD WEEKLY TRADE LEVELS Euro updated technical trade levels & sentiment – Weekly Chart EUR/USD in consolidation within April monthly opening-range Critical support at 1.0657 – breach above 1.1187 needed to shift broader focus higher Euro is down nearly 0.6% against the US Dollar this week with EUR/USD trading at 1.0880 ahead of the New York close on Friday. The focus remains on a break of the April opening-range with price continuing to contract within the confines of well-defined technical levels. These are the updated targets and invalidation levels that matter on the EUR/USD weekly price chart. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Euro trade setup and more Notes:In my most recent Euro Weekly Price Outlook we highlighted that the, “The immediate focus is on a break of the 1.0777-1.0977 range for guidance,” with our broader outlook still dependent on a hold above the March 2017 high-week close at 1.0657. A weekly reversal this week keeps price within the confines of the April opening-range heading into the close with Euro currently holding just above the 61.8% retracement of the late-March rally at 1.0831. Initial support steady at 1.0778 with a breach above 1.0976 needed to fuel the next leg higher in price towards key resistance at the 61.8% Fibonacci confluence zone at 1.1167/87 – a breach / close above this threshold would suggest a more significant low was registered last month with such a scenario exposing subsequent resistance objectives at the 100% extension at 1.1280 and the June 2019 high-day close at 1.1367. A weekly close below 1.0657 is needed to mark resumption of the broader downtrend towards the 2017 low-week close at 1.0532.

Therefore, optimistic equity traders might look to capitalize on the relative strength of the Aussie Dollar. Should risk trends continue, AUD/USD may probe overhead resistance once more, while support around 0.62 will aim to keep price afloat in the interim. Further still, IG Client Sentiment Data reveals retail traders just recently shifted their bias to the short side, suggesting continued AUD/USD strength may be ahead.

A summary of IG Client Sentiment shows traders are net-short EUR/USD - the ratio stands at -1.12 (47.18% of traders are long) – neutral reading Long positions are6.10% higher than yesterday and 12.29% lower from last week Short positions are 6.11% higher than yesterday and 34.08% higher from last week We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EUR/USD prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger EUR/USD-bullish contrarian trading bias from a sentiment standpoint.

Evidenced in the chart below, the Australian Dollar has considerably outperformed the ASX 200 relative to one of the other leading risk assets, the S&P 500. Using the US index as a benchmark, we can see not only the divergence between the two Australian assets, but also the formidable strength of the S&P 500 which has outperformed both AUD/USD and the ASX 200 since mid-March.

AUD/USD has gained on hopes the world’s financial authorities are equal to the massive challenge of coronavirus However it may be that some doubts on this score are setting in The currency could slip back if they get much deeper The Australian Dollar has risen sharply through April, benefitting as have many other growth-correlated assets from the astonishing rescue packages launched around the world in an effort to cushion economies from the coronavirus’ effects. And yes, billions of dollars’ worth of extra liquidity is now ready to flood markets, very possibly, turbo-charging recovery. When it comes. However, it hasn’t come yet and most national economies remain in varying states of lockdown while the contagion continues to spread and forecasts of global recession spread almost as fast. HAS OPTIMISM BEEN OVERDONE? There are now signs of market fear that they may have overdone the optimism and, if they take deeper root, progress could be tough for the Aussie. There’s not a huge amount on the domestic data slate likely to deter investors from their broad focus on the coronavirus headlines worldwide. Tuesday will bring a look at the minutes of the last monetary policy meeting of the Reserve Bank of Australia which took place on April 7. Interest rates were held at their record lows back then, to the surprise of markets which had just about expected a further reduction to go with the two quarter-point trims made in March. However, it seems likely that the minutes will do no more than make it clear that all stimulus options remain on the table, and that will not add anything to what the market must already know. Investors will also get a look at the ‘trimmed mean’ quarterly inflation numbers, a curtain raiser for the full official release which will come toward the end of the month. Stickily low inflation was a key barrier to higher interest rates in the pre-Covid days but, as rates are likely to remain constrained for some time in any case now, the numbers may lose a bit of their bite. Skilled vacancy data for March could attract more attention than usual given that official jobless data for the month held up astonishingly well. It’s likely that this merely reflects a survey period which expired before virus-linked travel bans and shutdowns were imposed, but the labor market is in special focus now. Barring some unpredictable bit of left-field good news it seems likely that the Australian Dollar could struggle this week, so it’s another bearish call.

AUSTRALIAN DOLLAR & ASX 200 PRICE OUTLOOK: AUSSIE LEADS RECOVERY BUT STOCKS LAG The Australian Dollar has charged higher in recent weeks as it continues to recover lost ground from the abrupt declines suffered across all risk assets in late February and much of March. Now more than 13% off its March 18 low, AUD/USD has been a leader among growth-sensitive markets but its equity counterpart, the ASX 200, has lagged comparable indices in other developed regions. ASX 200 PRICE CHART: INDEX LAGS INTERNATIONAL COMPETITION

Overall, AUD/USD is trending upwards. Recently, AUD/USD tested and failed to break below the key level of 0.63. Currently, AUD/USD is moving towards the key level of 0.64. Its next support level is at 0.61800 and the next resistance level is at 0.64200.

Overall, NZD/USD is trending upwards. Recently, NZD/USD moved lower, breaking the support level of 0.60300. NZD/USD’s next support level is at 0.58400 and the next resistance level is at 0.60300.

Overall, USD/JPY is ranging across. Recently, USD/JPY moved lower towards the key level of 107. Currently, USD/JPY is testing to break below the key level of 107. Its next support level is at 106.800 and the next resistance level is at 108.500.