Details Cookies
United Kingdom
Important margin product information

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs, FX or any of our other products work and whether you can afford to take the high risk of losing your money.

Cookie policy

This website uses cookies to offer you a better browsing experience by enabling, optimising and analysing site operations, as well as to provide personalised ad content and allow you to connect to social media. By choosing “Accept all” you consent to the use of cookies and the related processing of personal data. Select “Manage consent” to manage your consent preferences. You can change your preferences or retract your consent at any time via the cookie policy page. Please view our cookie policy here and our privacy policy here

Market Quick Take - April 2, 2020 Market Quick Take - April 2, 2020 Market Quick Take - April 2, 2020

Market Quick Take - April 2, 2020

Macro 3 minutes to read
Steen Jakobsen

Chief Investment Officer

Summary:  Markets went back into risk-off mode yesterday as the Trump administration's new forecast for the COVID-19 outbreak and extension of the US lockdown likely spooked investors as it means the economic pain will accelerate in the US. On the close the S&P 500 futures were 7% off the recent highs while the 2021 dividend futures on S&P 500 was down another 4.5% to the lowest levels this year. USD continues to strengthen but is weaker against JPY in a sign of safe-haven behavior coming back into currency markets. In bond markets the US 10-year yield trades back below 0.6%, not far from the 9 March low point. Crude oil, led by Brent, has jumped 12% on news that China will speed up buying for its strategic reserves.

What is our trading focus?

  • US100.I (NASDAQ 100) – a more technical pattern in the Nasdaq relative to the broader market yesterday, as new highs were posted intraday close to 8000 before the index weakened rather sharply into the close and then badly overnight – this sets up a technical argument for fresh shorts. The next key support level is at the 23.6% retracement level at 7,368.
  • USDCAD – Canada faces pressure on all fronts, but the growth hit to its economy from a collapsed oil sector and end of the housing bubble (both are larger as a percentage of the economy than is the case for the US) and inevitable QE necessary to keep the banking sector in operational shape could see significant further pressure on CAD. News about China buying oil has however left it back in black for the day.
  • EURNOK – The Norwegian krona has strengthened on news that China will move forward with plans to buy up oil for its strategic. The key support level to watch is 11.20, the 61.8% retracement of the February to March surge.
  • SWE30.I (Swedish equities) and EURSEK – Sweden has posted a significant jump in daily death numbers from COVID-19 and companies are increasingly laying off people forcing the government to tighten its policy on the virus and considering more stimulus.
  • HYG:arcx (US high yield) - high yield credit bonds are in focus again as Whiting Petroleum files for Chapter 11 and retailers saw across the board credit downgrades by Fitch.
  • VOOL:xetr (long volatility) – VIX index rose to 57 and the term structure remains in steep backwardation suggesting volatility has more upside.
  • OILUKMAY20 (Brent crude) and OILUSMAY20 (WTI crude) – Has jumped by more than 12% in response to reports that China is moving forward with plans to buy oil for its state reserves. However, a continued wide gap in Brent crude between the physical oil market and the June oil futures still highlight the opposing forces of tumbling demand and traders buying the future as its perceived cheap and in response to developments across other markets. High volatility will drive big moves – also to the upside - but beware of very weak underlying fundamentals. A coronavirus peak needs to be established in US and Europe before talk of stabilization can begin.

What is going on?

US macro data was less bad then expected as the ADP employment change for March was only down 27K compared to minus 150K expected. ISM Manufacturing for March came out at 49.1 vs 44.5 expected. These macro series are old news when they are released and their timing has most likely not captured the full effects from the US lockdown which is why the initial jobless claims is the preferred indicator at this time.


What we are watching next?

Dividends the next frontier - Regulatory pressure is mounting for banks to suspend dividends in favour of maintaining strong capital positions in the face of mounting bad debts. Following restrictions on dividends implemented in the past week by the ECB and BOE, the RBNZ are the latest to stop dividends for lenders under its jurisdiction. Australia’s banks fell in trade today as the mounting scrutiny presents increased uncertainty for the industry. Although widely expected to slash dividends a suspension would be a blow to investors who thrive of the high yield.

NATGASMAY20 trades $1.61/MMBtu, not far from the multi-year low at $1.51/MMBtu reached on March 23. Despite having traded weak for weeks, speculators have cut bearish bets by almost 90% from a record in February. EIA’s weekly stock data due at 14:30 GMT.

EURJPY – this is an interesting pair to watch as it combines the status of the Japanese yen safe haven trade as Japan pulls its investments home in the event we see further deleveraging, and the EU existential concerns. EURJPY sold off heavily yesterday and is not far from its cycle low around 116.25.

XLE:arcx (US energy sector), OIH:arcx (US oil services), OIL:xpar (European oil and gas) – US president Trump will be meeting with US oil executives on Friday to discuss how the US government can help the industry. This could be the beginning of indirect nationalization of the US oil industry which would keep oil production higher than otherwise and thus extend the pain for all oil producers. A potential import tariff on oil from Saudi Arabia is on the table.

Carmakers – the large carmakers in the US have seen a collapse in showroom traffic in March and Fiat Chrysler reported a 10% sales decline in Q1 and GM 7% decline. Ford is expected to report Q1 sales numbers today. The car industry could be the next industry to go full into crisis mode.

Initial jobless claims – probably the most timely macro indicator right now on the US economy and how COVID-19 is impacting the labour market. Consensus is looking for another high number around 3.76mn new jobless claims filed with a whisper number of 5mn. The continuing claims are expected to jump to 4.94mn the highest level since January 2010 killing 10 years of labour market gains in two weeks.

Lockdown extensions – this remains the medium term key as its impact the economy’s ability to make a V-shaped recovery.

The Chinese Yuan is slipping against the USD. The onshore yuan (CNY) fell more than 200 pips to hit 7.1280/USD at one point today, the weakest level since October last year. Whilst the PBOC want nothing less than a disorderly devaluation of the currency, they have been very clear they wish to detach from the importance of the “7 level”. A weaker currency would be desirable at present in order to boost exports and support the manufacturing sector, which is hit from the collapse in global demand. The weaker oil price allows for a weaker currency without raising the price of China’s import bill at present also. However, one to watch on the risk radar. This as a disorderly move would serve a second punch to weakened risk asset markets and no doubt spark another heavy risk off wave, particularly in the current fragile environment. A markedly weaker CNY would also add to the near term deflationary pressures and commodity collapse as global demand has fallen off a cliff via COVID-19 containment measures.


Calendar today (times GMT)

  • 1230 – US Feb Trade Balance
  • 1230 – US Initial Jobless Claims most anticipated number today
  • 1400 – US Feb Factory Orders
  • 1400 – US Feb Durable Goods Orders
  • 1430 – EIA Natural Gas Storage Change

Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app:

Apple Sportify Soundcloud Stitcher


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (

Saxo Markets
40 Bank Street, 26th floor
E14 5DA
United Kingdom

Support Centre
For existing clients, please click here to request support via the Support Centre.

Have a question about our products, platforms or services? Visit the Support Centre to find answers for our most frequently asked questions. If you are still unable to locate an answer to your question, you will also find contact details for your local Saxo office to speak with a representative.

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo Markets is a registered Trading Name of Saxo Capital Markets UK Ltd (‘SCML’). SCML is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo Markets assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.