All eyes on global central banks

All eyes on global central banks

The outbreak of coronavirus has caused a severe selloff across the global markets. Last week was the worst since the financial crisis. Economic activity in China has notably declined and the same may happen to other major economies over the next few days and weeks.

Such situation has led to rumors that central banks will intervene to protect price stability. Earlier this morning, multiple sources have stated that the G7 will have a teleconference later this week.

Multiple central banks also sent out a statement stating that they would use the tools appropriate to support the economy. This is a clear sign that there might be a coordinated action by the central banks any moment, which will have a major impact on the markets. 

Why is it important for traders? 

In particular, such an event will support S&P 500 and other stock indexes. The short-term reaction of XAU/USD may be negative. The currency pairs which will be the most affected by the news are AUD/USD, NZD/USD, and USD/JPY.   

S&P500-20HH1.png

Remember that proper risk management in needed in times of abnormal volatility.

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