The Future of Foreign Exchange Markets Episode 123 [Tomotaro Tajima]

Tomotaro Tajimaプロフィール

Economics analyst. Alfinaants President and CEO. Born in Tokyo, 1964. After graduating from Keio University, shifted career from currently Mitsubishi UFJ Securities. Analyzes and researches a wide range from finance and economy in general to strategic corporate management, and ultimately individual asset formation and fund management. Serves as lecturer for lectures, seminars, and training hosted by private companies, financial institutions, newspapers, local governments, and various business organizations, with about 150 lectures per year. Wrote numerous serials and comments in print media such as Weekly Gendai’s "Rules of Internet Trading" and Examina's "Money Maestro Training Course." Also authored columns on many websites covering stocks, foreign exchange, etc., and earned high評価 as a stock and FX strategist. Also responsible for the Home Economy section of Kodansha Free People’s “Basic Knowledge of Contemporary Terms.” Regular appearances on TV (TV Asahi “Yajiuma Plus,” BS Asahi “Sunday Online”) and radio (MBS “Tōhi-chan’s Morning Show”) have led to current roles as regular commentators on Nikkei CNBC’s “Market Wrap” and Daiwa Securities Information TV’s “Economy Marche.” Notable DVDs include “Extremely Easy to Understand: Tomotaro Tajima’s FX Introduction” and “Extremely Easy to Understand: Tomotaro Tajima’s FX Practical Technical Analysis.” Major books include “Wealth Reassessment Manual” (Paru Publishing), “FX Chart: The Formula for Profit” (Alchemix), “Why Can FX Make You Asset Rich?” (Texts), among many others. The latest issue is “How to Profit by Riding the Rising U.S. Economy” (Kodansha Free People).

※This article is a reprint/re-edited from FX攻略.com July 2020 issue. Please note that the market information stated in the text may differ from the current market.

Even with NY oil’s first-ever negative and the overall reaction relatively calm

As of writing time (late April 2020), the biggest “event” in the international financial markets would be the truly earth-shaking first-ever negative price for NY oil futures.

As is well known, the price of WTI May futures temporarily plunged to as low as minus $40 on April 20. This occurred because global demand for crude had collapsed due to the coronavirus shock, and the market could not absorb the selling pressure associated with contract rollovers despite actual demand buying having vanished.

Some blunt insiders likened this phenomenon to “paid disposal of garbage.” It’s an apt metaphor, but calmly viewed, it was merely a technically specific occurrence arising in futures trading under the pandemic of a terrifying infectious disease (a global spread).

Of course, in a situation where the world is collectively trying to fight the novel coronavirus, leaders of oil-producing nations like Saudi Arabia, Russia, and the United States deserve strong reproach for not being able to formulate concrete countermeasures immediately.

That said, one could call it only a matter of time. By the time readers see this article, the leaders of oil-producing countries will probably have devised some emergency countermeasures, given that “they have no choice”.

What is more noteworthy here is that despite the shocking event of NY crude futures briefly entering negative territory for the first time in history, the overall financial markets’ reaction was relatively calm.