BOE Cut Rates

Nikkei Drops Over 2%, BOE Cut Rates

Cut Rates
Virus response disappoints

Asian indices retreated on Wednesday despite the strong earnings in Wall Street as the U.S. virus response disappoints investors, while volatility remains the key theme in the markets. Unclear stimulus from President Trump failed to calm traders as the coronavirus cases in the U.S. are over 1,000, while in Italy, there are over 10,000 cases.

Nikkei index finished 2.25% lower at 19,416. The Shanghai Composite index closed 0.66% lower at 2977. The Singapore FTSE Straits Times is 1.24% lower at 2798. Hang Seng in Hong Kong was 0.68% lower at 25217. The ASX 200 index entered the bear market as it finished 3.60% lower at 5725. 

European indices started in positive territory the day. The German DAX is 1.90% higher at 10,674. CAC40 index is 1.91% higher at 4,725, while the FTSE MIB in Milan is 1.80% higher at 18,191. In London, the FTSE 100 is 1.15% higher at 6,029 after the Bank of England cut interest rates by 50 basis points.  

XAUUSD Daily Chart

In the commodities markets, the crude oil price turns lower today after yesterday’s rebound. WTI crude oil is 0.93% lower at $34.03, while the Brent oil is 1.79% lower at $37.27 per barrel. The gold price continues higher after yesterday’s pullback, and as of writing is 0.69% higher at 1660. The gold price first resistance seen at $1,703 the recent high, while the support stands at $1,584, the recent low. Silver price is 0.80% higher at $17.00.    

Digital assets trading mixed today. Bitcoin (BTCUSD) is 0.34% higher at $7,912, hitting the daily low at $7,807 and the daily high at $8,006. Bitcoin’s technical outlook is bearish as the cryptocurrency trades below the 100-day moving average for the third consecutive day. Immediate support for BTCUSD stands now at $7,600, the recent low. On the other side, the first resistance is seen at 9,123 Friday’s high and then at 10,495 the yearly top.

Ethereum is 0.18% higher at 200.75 with capitalization at 22.04 billion. The first resistance for Ethereum stands at $274.08, the February top, while the first support stands at $194.64 today’s low. Ripple is 0.69 lower at 0.2100. Litecoin (LTCUSD) is 1.02% lower at 49.59. The crypto market capitalization stands now at $224.73 billion.

In the Lookout: S&P said that Australia’s economy would move into a recession by June 2020. The Australia Home Loans came in at 3.1%, beating forecasts of 0.5% in January. Investment Lending for Homes came up to 3.6% in January from the previous 2.8%. The Australia Westpac Consumer Confidence, registered at -3.8% below the expectations of -0.4% in March. 

People’s Bank of China has set the Yuan (USDCNY) reference rate at 6.9612 versus yesterday’s fix at 6.9389. 

Trading Perspective: In the foreign exchange markets, the Aussie dollar is 0.28 higher at 0.6522 against the greenback. The U.S. dollar index is 0.24% lower at 96.25. NZDUSD trades 0.75% higher at 0.6312.

Bank of England Cut Bank Rates By 50 bps, GBPUSD Higher

The Bank of England, in an emergency move, cut the interest rates by 50 basis points to 0.25% in an attempt to support the coronavirus outbreak impact on the economy. The BOE also announced a new term-funding to support small and medium-sized companies, and measures to help commercial banks increase lending. The BOE maintains the gilts purchase target at 435 billion from 435 billion. It also maintains the Corporate Bond Purchase Target to 10 billion.

On the news, the GBPUSD dropped by almost 100 pips down to 1.2826 but soon managed to rebound and return above the 1.29 mark. On the technical side, the pair after yesterday’s sharp selloff pierced the 100-day moving average, and now the bears are in control. 

On the downside, the first support for the pair will be met at 1.2826, the daily low. The next support level stands at 1.2769, the low from March 4. On the other hand, resistance for GBPUSD seen at 1.2946 the daily high. More offers might emerge at 1.2986, the 100-day moving average. 

GBPUSD Daily Chart
GBPUSD Daily Chart