Archives of “April 2020” month

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AUD/USD months-ahead view – below 0.59

  
Analysis, Forex
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  • outlooks for their respective main commodities, posing downside risks over the medium term
  • Oil prices have plunged over the past year, partly due to excess supply, but also due to a dire economic outlook
  • metals tend for follow (or co-move with) oil
  • iron ore prices have help up … mainly due to supply bottlenecks .. Once those have been cleared, there’s potential for iron to more closely reflect the deterioration in demand. So too for coal
For the AUD
  • multi-month, we hold a negative bias … targeting as low as 0.59. 

Australia – Virgin airline has collapsed, voluntary administrators called in

  
  Analysis
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Virgin Airline in Australia was hit by the evaporation in demand for travel

From the airline statement:
  • Virgin Australia Holdings Limited (ASX: VAH) (Virgin Australia Group or Group) has entered voluntary administration
  • to recapitalise the business and help ensure it emerges in a stronger financial position on the other side of the COVID-19 crisis
  • Velocity Frequent Flyer, while owned by the Group, is a separate company and is not in administration. 
  • The decision comes as the Group has continued to seek financial assistance from a number of parties, including State and Federal Governments, to help it through the unprecedented crisis, however is yet to secure the required support. 
  • Virgin Australia will continue to operate its scheduled international and domestic flights which are helping to transport essential workers, maintain important freight corridors, and return Australians home. 
There is more but that’s it in a nutshell.
Virgin Airline in Australia was hit by the evaporation in demand for travel

Saudi Arabia, OPEC are considering cutting oil output ASAP, not waiting until May

  
Analysis, Crude

The headlines on this were a out earlier, but details were sparse, adding more now:

  • Saudi Arabia and other OPEC members are considering cutting their oil output ASAP
  • Not waiting until next month (in May OPEC’s recent production agreement with the US and Russia expires)
  • “Something has to be done about this bloodbath,” said a Saudi official familiar with the matter. “But it might be a little bit too late.”
via the Wall Street Journal, link here may be gated.
The headlines on this were a out earlier, but details were sparse, adding more now:

This is when the world realizes what’s really happening in oil

  
  Analysis
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This is when the world realizes what’s really happening

I’ve been warning for weeks that oil is a negative-yielding asset. If you have it and don’t want it, it’s a big problem to get rid of it.
This is when the world realizes what's really happening
People just couldn’t comprehend how a commodity could go negative. But natural gas went negative last year at some delivery points. Before bond yields went negative people also couldn’t comprehend it. They said it was impossible. Now it’s normal.
Here’s the bottom line: When there is more oil than people can store, you have to pay someone to get rid of it.
Obviously, negative $33.30 per barrel is when someone get stuck and implodes.
There are some massive margin calls ongoing right now. Some funds have imploded and who knows what they might take down with them.
Crude is down 330% today
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