Asian indices dropped Tuesday as global growth worries are on the headlines again. Japan’s Nikkei225 index shed 0.5%, while Hong Kong’s Hang Seng lost 0.9% and Shanghai Composite index fell 0.7%, Australian stocks have snapped a five-session winning streak with the ASX 200 declining by 32 points or 0.5% to 5859. The Aussie dollar has also fallen to its lowest levels in a fortnight as it eased throughout the local session. Australian 10-year bond yields fell one basis point to 2.30%. Ten-year Treasury yields lost 3 basis points to 2.75%.
European indices started weaker today taking their cue from a downbeat session in Asia as the IMF cut its global growth forecast for 2019 to the lowest level in three years. FTSE100 in London is down 0.55% to 6,934, the DAX in Frankfurt is losing 0.49% to 11,084 and CAC40 gives up 0.29% to 4,855.
On the Lookout: International Monetary Fund (IMF) downgraded its forecasts for global economic growth to 3.5% in 2019 and 3.6% in 2020, down from 3.7% for both years previously as risks surrounding uncertainty in US-China trade relations persist along with a potential “no-deal” Brexit for the UK and EU.
There are monetary-policy decisions for the Bank of Japan on Wednesday, the Bank of Korea and the European Central Bank on Thursday.
The World Economic Forum, the annual gathering of global leaders in politics, business and culture, opens in Davos, Switzerland on Tuesday.
Trading Perspective: Global growth concerns continued to remain a drag on forex markets. EURUSD lost the bullish momentum yesterday as the price broke below the 50-day moving average at 1.1380. Demand can emerge at previous week low at 1.1350, but I expect more solid buying at monthly lows around 1.12670 area. On the upside, major resistance is at 1.1412 yesterday’s high and then at 1.1491 the previous week high. European macro news is disappointing, yesterday it was German PPI, in December fell by 0.4% on the month, and that was worse than the 0.2% decline that analysts were expecting. The November report showed a 0.1% increase in growth. The fall in PPI indicates that demand is weak, and that ties in with the other disappointing economic indicators that Germany has produced recently.
USDJPY is trading in just 30 pips consolidative trading range as traders are indecisive at current levels. In the hourly chart the 100-hour moving average is the immediate support at 109.26 while more support the pair will find at 108 figure. On the flipside, the first resistance is at 109.78 the yesterdays high and then at 110.
AUSUSD is trading lower for the third session in the row hitting two weeks low at 0.7120. Negative macro news from China and the downgrade for global growth from IMF send investors to USD. The pair has trapped in descending channel in the hourly chart, and a break below 0.7115 would imply the end of the corrective bounce from end of year lows below 0.70. Immediate support is at 0.71, while more solid support can be found at previous monthly low at 0.7014. On the flipside, the first resistance is at 0.7161 and then at 0.7183 previous daily high.