Stocks in the US rallied on Friday as traders were relieved to see an end to one of the most extended U.S. government shutdown in history. Donald Trump agreed to temporarily end a 35-day-old partial government shutdown without getting the $5.7 billion he had demanded for the Mexico border wall. China-US relations remains in focus as traders mulled over conflicting signals ahead of the round of trade talks over the week. Nikkei 225 index gave up 0.60% to 20,649, while stocks in Shangai lost 0.18% to 2.596. Hong Kong’s Hang Seng index was flat at 27,546. Australian stocks pushed higher, and the ASX200 index jumped by 0.7% to close above 5900 for the first time since November 12th, 2018 on track to have the best month since July 2016.
On the Lookout: Moody’s Investors Service, highlighted in its latest research report that major central banks are expected to slow their pace of tightening. Here are some key points:
“The Federal Reserve probably will hike interest rates two times this year, at most, instead of the previously projected three or four.
The European Central Bank will delay increasing deposit facility and refinancing rates until 2020, they said, revising a forecast for the second half of 2019.”
This week has some interesting events; traders eyes will be on the FOMC meeting on Wednesday night. On Tuesday, the House of Commons is expected to vote on Theresa May’s Brexit plan B, including amendments; also, we have the US consumer confidence. On Wednesday we have the Q4 Aussie CPI and German CPI. Thursday has China’s manufacturing and services PMIs and German unemployment; and Friday has Eurozone Q4 GDP, US personal income and spending, and the Chicago PMI.
Four of the world’s biggest companies will release earnings from Tuesday to Thursday (Apple, Microsoft, Facebook, and Amazon).
Trading Perspective: EURUSD made an impressive come back on Friday jumping 0.89 percent, the biggest single-day rise since Sept. 20th, 2018, canceling the bearish view that sketched before and broke above 1.14. Now the pair looks for a break above 1.1425 and then at the crucial resistance in 1.1452 the 100-day moving average. On the flipside, immediate support stands at 1.13 Fridays low and the weekly low at 1.1289. The previous monthly low at 1.1269 will provide more solid support.
In Euro futures, markets traders added almost 1.5K contracts to their open interest on Friday from Thursday’s final 529,804 contracts. Volume, instead, dropped markedly by nearly 54.4K contracts, partially reverting the previous sharp build.
AUDUSD is making new ten days trading high as it breaks above 0.72. Strong supply for the pair will be met at the 200-day moving average which stands at 0.7308. Support is at 0.7076 the Friday’s and weekly low and then at the monthly low at 0.7014.
Positive sentiment still persists for sterling as the pair trading around 1.32. UK vote on the amendments to the UK PM May’s Brexit Plan B due tomorrow will remain in focus, keeping the GBPUSD traders on edge. The weekly high at 1.3214 is the first resistance for the pair while support will found at 1.3053 weekly low.
XAU/USD closed above 1300 on Friday, a level we haven’t seen for the precious metal since May 2018. Geopolitical turmoil along with global growth worries have been pushing the yellow metal higher in the last months. Immediate resistance is at 1309 the high from June 14th, 2018. On the flipside, support could be seen at 1280, Friday’s low, and 1276 January’s low.