Profit Taking Sends Asian Stocks Lower

Asian indices finished lower today as traders took some profits after yesterday’s rally. In Japan, the Nikkei 225 index shed 0.4 percent to 21,449, the Hong Kong’s Hang Seng index lost 0.6 percent down to 28,772, the Shanghai Composite index lost 0.67 percent to 2,941. The Aussie stocks also finished lower with ASX 200 down 58 points to 6,128. Crude oil lost 32 cents to $55.16/barrel while Brent oil gave up 4 cents to $64.72/barrel. Gold is trading 3 bucks lower to $1325, and the US Dollar index is 0.01 percent lower to 96.41.

European markets also follow the softer Asian tone as traders expect that Theresa May will delay Brexit and potentially rule out a no-deal outcome in her statement later today. In Germany, DAX gives up 0.28 percent to 11,474, the CAC40 in Paris is trading 0.44 percent lower to 5,209 while the FTSE in London is down 0.78 percent to 7,125.

On the Lookout: Italy’s Deputy Prime Minister (PM) Salvini reiterated that there would be no revision to the budget while saying that the government will stay in office for five years. In Euro macro news, the France Consumer Confidence came above analyst’s forecasts (92) in February, and Actual (95) and Germany Gfk Consumer Confidence Survey met forecasts (10.8) in March.

In the calendar today, investors will look at the Fed Chair Powell’s testimony on the semi-annual monetary policy report before the Senate Banking Committee at 14:45 GMT. Building permits and housing starts are released with home prices, consumer confidence, and the Richmond Federal Reserve index.

Trading Perspective: GBPUSD rallied during US session on the reports that the UK PM May is considering a plan to delay Brexit. The Cable jumped nearly 70 pips and regained the 1.3160 level on the Brexit headlines before retreating slightly and trading today at 1.3150. The pair has established bullish momentum and an attempt to regain 1.32 looks possible. Support for the pair stands at the 50-hour moving average at 1.3078 which if broken might accelerate the slide further towards 1.3055 and the 100-hour moving average.

Open interest in GBP futures markets shrunk by 801 contracts on Monday vs. Friday’s final 195,345 contracts, prolonging the erratic performance. Volume, instead, went up by nearly 2k contracts, reverting three consecutive drops.

GBPUSD Hourly (H1) Chart

USDJPY failed to hold above the 111 level and return to its well-known trading range around 110.80. Bulls need a break above the 111.30 area to establish a new uptrend, while bears are looking for a break below the 50-day moving average at 110 to accelerate the selling pressure.   

In JPY futures markets the open interest rose by almost 3.5K contracts on Monday from Friday’s 184,214 contracts. Volume extended the choppy activity and went up by around 14.3K contracts.

EURUSD is trading higher gaining some pips and enhancing the short-term positive momentum as currency traders attention turn to the testimony by Chief Powell before the Senate Banking Panel, where market participants largely anticipate a dovish tone. The pair will face strong supply at 1.1385 area where the 50 and 100-day moving averages are crossing. On the downside, support stands at 200-hour moving average around 1.1323.

In EUR futures markets, investors trimmed their open interest positions by nearly 1.8K contracts on Monday from Friday’s final 529,355 contracts. In the same direction, volume shrunk by around 21.3K contracts, its second consecutive drop.

EURUSD Hourly (H1) Chart