Coronavirus: A Pandemic Feared By All

On Wednesday, the World Health Organization (WHO) classified the Covid-19 (Coronavirus) as a pandemic, with total number of cases now topping more than 120K, claiming more than 4000 lives worldwide. Ever since the outbreak of the virus, impact on global economy had been significant, with central banks around the world initiating monetary policy loosening (eg: interest rate cuts & quantitative easing) in effort to support their economy. 

One of the major impact can be seen in the energy markets, namely the crude oil. The black commodity was initially dragged down during the early stage of the outbreak in China, harming the manufacturing and transportation sectors which have the highest oil consumption. Adding on with previous concerns on declining global demand for oil, the virus triggered a major sell-off on crude oil, thus causing the plunge in oil prices. 

To support the fall in oil prices, OPEC suggested in their meeting to deepen their production cut plan alongside with its allies, OPEC+ by additional 1.5M barrels per day. Things turned havoc after Russia refused to cooperate with the latest plan, triggering OPEC’s leader, Saudi Arabia to call-off the plan and instead, prompting oil production starting April. Tensions worsen as both country goes into an all out price war, causing oil to plunge more than 20% on Monday, the largest drop since the Gulf war in 1990. 

As crude oil price now traded at $32 per barrel, Canada’s economy which depends majorly on the exports of oil, also slumped alongside the oil market. Pair of USD/CAD rose to its highest level in 2016 above the 1.3800 handle on Thursday. Besides that, Asian pairs namely AUD/USD and NZD/USD were also being sold as their major trading partner, China continues to struggle with the Covid-19 outbreak. 

With all the havoc happening in just the first quarter of 2020, such as global economy slowdown, Covid-19 pandemic and now rising tensions between Saudi-Russia, had kept safe-haven assets at their high levels while stock markets face the worst well-off since the previous recession. Until a cure is found, the world remains restless, worrying that the virus will only worsen overtime. 

Regain Capital wishes to remind all readers to wash their hands constantly, drinking more water regularly and avoid contact at crowded areas. Stay home, stay safe with trading by your side.    

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