Asian stocks finished mostly lower, as investors digest updates from both the European and US central banks. Yesterday, the IMF cut its GDP prediction for the third time in the last six months to the lowest since 2009. US President Donald Trump also threatened to impose tariffs on $11 billion of European Union (EU) imports as retaliation on what he claims to be unfair subsidies to Airbus. In Japan, the Nikkei225 main index added 0,11 percent to 21,711, the Hang Seng benchmark in Hong Kong finished 0.63 percent lower at 29,927. The Shanghai Composite underperformed, finished 0.80 percent lower at 3,215 and in Singapore the FTSE Straits Times index finished 0.04 percent higher at 3,330. Australian equities fell slightly on Thursday, with the ASX200 benchmark down by 0.4 percent or 24.8pts to 6198.7.
In commodities markets, Crude Oil consolidates at a five-month high and holds recent gains at 64,24 supported by OPEC’s ongoing supply cuts, geopolitical uncertainty and the US additional sanctions on Iran. The near-term upside target is the 65.00 figure, but I expect some profit taking to prevail as the black gold has reached overbought levels, the RSI trading above 70. Brent oil started the week with a gap up and trades today at $71.42/barrel also holding recent highs. Gold rebounded yesterday above $1300 at two weeks high, supported by escalating geopolitical tensions concerning Tripoli, the Libyan capital. The precious metal is trading today at $1307.50, making the daily high during Asia session at 1,309 and the low at 1,305. XAUUSD technical picture is positive, and now immediate support stands at the 50-hour moving average at $1300, which if broken can accelerate the downward move to 1293 and the 200-hour moving average. Strong resistance now stands at the $1309, the 50-day moving average, and I expect the bears to defend $1309 with full force.
European session started in mixed fashion as the Brexit deadline extended for one more time, DAX30 is 0.23 percent lower to 11,870, CAC40 is 0.16 percent higher at 5,458 while FTSE100 in London is 0.33 percent lower at 7,396 and the FTSE MIB in Milan is underperforming, trading 0.56 percent lower at 21,546.
In cryptocurrencies, Bitcoin (BTCUSD) consolidates above the 5,000 mark, and the key 200-day moving average resistance at $5,225 making the daily high at 5,338. Bitcoin will find support at the 50-hour moving average at 4,514. The rally in BTC triggered bids across the industry with Ethereum (ETHUSD) underperforming today, trading 10 dollars lower today at 171 and Litecoin (LTCUSD) lost 3 dollars to 85.55.
On the Lookout: The FOMC minutes suggested that members generally favor being patient for the remainder of the year, the European Central Bank announced that the Governing Council left the interest rate unchanged while Mario Draghi noted that the risk of recession for the Eurozone remains low for now.
In Brexit front, the EU struck a final accord and offered a flexible Brexit deadline extension until Oct 31st to the UK, leaving doors open for an early exit if the PM May manages to clinch a Brexit deal.
In its 2019 World Economic Outlook yesterday, the International Monetary Fund slashed its prediction for the rate of growth in global GDP in 2019 by 0.4 percentage points to 3.3% and that for 2020 by 0.1 percentage points to 3.6%.
Trading Perspective: In Forex markets, most majors are sticking to tight trading ranges for one more day as the ECB and FED failed to impress investors. AUDUSD is trading 0.14 percent lower at 0.7160 near a two-week high, after the government called for a Federal Election for May 18. Generally, an Australian election has not had a meaningful impact on FX markets. However, there are signs that Aussie investors can be a little hesitant in the lead-up to an election due to concerns about policy changes. Over the past five elections, the AUD has been a little soft and volatile at times in the weeks heading into an election and has stabilised once Australians have voted. Kiwi is trading 10 pips lower at 0.67.53. The US dollar index is trapped in mid 96.
GBPUSD consolidates between the 50 and 200-day moving average. Today the pair is trading flat at 1.3085 (low at 1.3076, high at 1.3107) as the Brexit deadline extension is likely good news for Cable. On the downside, major support will be found at 1.2977 at the 200-day moving average while solid protection can be found at the 100-day moving average around 1.2929. On the flipside, immediate resistance stands at 1.3195 the high from previous week session, and from there major resistance can be found at 1.3232 while 1.3382, the yearly high, will be met with strong supply.
In GBP futures markets, open interest shrunk by just 326 contracts on Wednesday from the previous session. Volume followed suit, down by 35.2K contracts, reversing the previous build and prolonging the erratic performance seen as of late.
EURUSD is trading flat after Mario Draghi failed to start any new trend. The pair is trading today at 1.1281 at the daily high. The pair needs to break above 1.13 to give bulls a breath and then approach the 50-day moving average at 1.1329 to establish a short term bullish momentum. Immediate support can be found at the 100-hour moving average around 1.1215. Comments from ECB and FOMC today will provide the cues for the next short term trend for the pair.
EURO remains in a negative mood following recent poor figures in the Eurozone. In fact, recent disappointing readings in the region somehow confirm that the slowdown in the bloc and the ‘patient-for-longer’ stance from the ECB could be among us for longer than expected.
On the Euro political front, headwinds are expected to emerge in light of the upcoming EU parliamentary elections, where the focus of attention will be on the potential increase of the populist and right-wing option among voters.
In Euro futures markets, traders added just 721 contracts to their open interest positions on Wednesday. In the same direction, volume increased by around 62.5K contracts.
USDJPY: The pair is trading higher today at 111,10 having hit the low at 110.89 and the high at 111.16. Major support for the pair stands at 111 round figure if the pair manages to break below the 100-day simple moving average at 111.10. Immediate resistance for the pair stands at 112.06 the March 2019 high.
Open interest in JPY futures markets rose by 742 contracts on Wednesday, while volume shrunk by around 12K contracts, partially reversing the previous build.
USDCAD gains momentum and recovers from 1.33 to 1.3353 and then printed a fresh weekly low at 1.3292, which now acts as strong support. The pair will find extra support at 1.3285, and the 50-day moving average which if breached will drive prices down to 200-day moving average key support. On the upside, immediate resistance stands at 1.34 a break of which can escalate recent rebound towards 1.3430.