The 2020 Black Monday
Global foreign exchanges are claiming that a secondary Black Monday has been unleashed, with multiple currencies plummeting to their demise and others surging when they’re typically down on the S&P. The United States Treasury provided insight onto how currencies like the New Zealand Dollar, Canadian Dollar, Australian Dollar and American Dollar all saw sharp declines in valuation. They believe that substantial concerns surrounding the Coronavirus prompted these immediate declines, which extend to Oil Prices as well. This doesn’t mean that there weren’t peak periods before the upcoming slump. Before the United States Dollar dropping in valuation, it’s currency pairing with the Euro surged by 1.1%, marking an increase in trades before the decline. It appears that traders were moving funds before potential outbreaks crashed markets.
One of the most surprising alterations in global foreign exchange markets applied to the Yen. This Japanese currency saw a substantial surge of 8.8%, which is the highest in eleven years. There was a flipside to this surge, with the Japanese Dollar dropping to its lowest since 2016. It should be noted that the overwhelming percentage of Japanese citizens, traders and investors, engage with the Yen.
The Senior Market Analysts for the JFD Group, Charalambos Pissouros, spoke with financial news outlets this week. Her statements regarded the alterations following Black Monday 2020. She mentioned: “Among the G10 currencies, oil-related NOK and CAD were found to be the main losers, followed by the risk-linked Aussie and Kiwi. The main gainers were the safe-havens JPY and CHF, followed by the Euro, which seems to be benefiting from speculation that the ECB will cut interest rates by less than other major central banks.”
Those remarks continued with: “It also seems that the common currency was used as a vehicle in carrying trades, and thus, now investors are unwinding such deals, it gets benefited. In other words, it wore its haven suit. Among the EM currencies, the currency that felt the heat the most was, of course, the Russian Ruble.
Charalambos Pissouros closed out his statements by expressing: “With regards to the coronavirus sequel, although infected cases slowed somewhat on Sunday, deaths accelerated sharply, while the Italian government ordered a lockdown of large parts of the north of the country, including Milan. The market reaction suggests that investors are unconvinced that the virus can be contained soon, something that heightened further recession fears.”
The FX Storm
Multiple analytic firms and executives within the global foreign exchange industry have spoken on the unexpected revolution of Black Monday 2020. This included the ING Analyst Firm, who provided a public statement that reads: “Financial markets have suffered a rude awakening to notions that volatility was a thing of the past. We’re now seeing the kind of market dislocation not witnessed since the 2008-09 global financial crisis.”
Those remarks were extended by the Global Head of Markets & Regional Head of Research for UKCEE, Chris Turner, expressed that these alterations in standard global foreign markets have created the perfect storm for the blockchain industry. Turner would be drastically incorrect with this prediction, as substantial modifications in the conventional financial markets become problematic for global traders. This was proven back in 2016 when Brexit was first voted into power, with it facing severe delays for four years. Back then, it was challenging to meet the demands of consumers, with cryptocurrency analysts believing similar actions will unfold in the coming weeks.
Forex Brokerages and Blockchain Firms both experience financial harm during moments of instantaneous crashes. Looking back to historical instances of financial markets crashing, modern era traders have continually moved their positions from the negative balance and implemented margin calls. Fallouts coming after Black Monday 2020 will include hundreds of millions in lost trades with major currencies.
This was proven with the Swiss National Bank in 2015, which is when they dampened regulation on the Swiss Franc and removed pairings with the Euro. There’s an overwhelming amount of evidence to indicate Chris Turner’s prediction is incorrect, which shows that the United Kingdom Government doesn’t have the proper assets governing over their financial markets.
Flash crashes have become a regular event throughout global financial markets. The last instance of a substantial crash affecting global markets came through Japan. January 3rd marked the day that the Japanese Yen plummeted by drastic margins, forcing local currencies in the Asian reason also to see immediate declines in valuation. Information regarding countless clients and financial traders were lost in the process, with some analysts concerned similar factors will apply throughout 2020.
The Director of Trading with Skilling, Christos Yerasimou, spoke with local financial outlets on the adverse effects of global trading. He stated: “Other than the US indices global trading halt, we have not experienced any other issues. On the contrary, our pricing and execution engine is responding to the market events pretty well.”
Those remarks moved towards changes in trading activity. Christos Yerasimou mentioned: “We have seen a surge in commodities trading, mainly Gold and Oil. This heavy increase was also probably supported by the fact that US indices trading was halted globally due to the breach of their circuit breaker levels. I would say EURUSD was the most traded pair today; but, as I mentioned before, the clients’ interest is primarily focusing on the commodities and non-US indices today.”