Asian indices finished mostly lower today as investor sentiment remains fragile amid trade war and the upcoming rate cuts from major Central Banks. The Nikkei225 finished 0.01 percent lower to 20,408 below its 100-day moving average; the Hang Seng benchmark in Hong Kong finished 0.70 percent lower at 26,702. The Shanghai Composite finished 0.96 percent lower to 2,862 also below the 100-day MA, while in Singapore, the FTSE Straits Times index finished 0.20 percent higher to 3,130. Australian equities bounced on the back of the rate cut news, with the ASX200 finishing up 11 points or 0.2% to 6,332. The market was supported by gains in the Financial, Materials, and Telco sectors, which offset losses in the Healthcare, Energy, and IT sectors.
European session started mixed today as trade war intensifies across the globe, and news that the EU is preparing to launch EDP against Italy tomorrow. DAX30 is giving up 0.12 percent to 11,803, CAC40 is 0.52 percent lower at 5,214 while the FTSE MIB in Milan is trading 0.75 percent higher at 20,036. The London Stock Exchange is down 0,22 percent to 7,128 as traders are increasingly concerned over the impact that the ongoing trade dispute is having on the global economy.
In commodities markets, crude oil continues consolidation to recent lows down to 53.28. Oil is down almost 20% from the high in late April, wiping out about half of its rally earlier this year, due to increasing trade worries. Brent oil also trades flat to $61,23 per barrel as major oil producers are yet to agree on adjustments on output. Gold continues to attract investors as a safe-haven asset, adding more than 15 dollars and trades at 1327 zone the highest level since mid-April after President Trump slapped 5% tariffs against all imports from Mexico. The precious metal broke above all major daily moving averages turning the technical picture to bullish. Gold will find support at 1300 round figure and then at 1295, the 100-day moving average while more bids will emerge at 50-day moving average at 1287. On the upside, resistance stands at 1328.67 the high from the Asian session.
In cryptocurrencies market, bitcoin (BTCUSD) is under selling pressure today breaking below the 8,000 figure down to 7,849. The daily low for BTC was at 7,691 and the daily high at 8,556. Immediate support for BTC stands now at $7,690 the session low. On the upside, strong resistance now stands at the 8,000 round figure. Ethereum (ETHUSD) gives up 15 dollars to 243, and capitalization dropped to 26 billion. On the upside, the immediate resistance stands at 287, the recent high while the support stands at the 200 round figure. Litecoin (LTCUSD) also trades lower at 102. The crypto market cap holds above $173.0B.
On the Lookout: The Royal Bank of Australia cut its Official Cash Rate (OCR) by 0.25 bps to a record low of 1.25% — the first since September 2016. The RBA has cited downside risks to economic growth due to trade tussles while praising Chinese efforts for economic improvement. Australia’s retail sales fell -0.1% m/m in April, below market expectations, while in annual terms, sales growth continued its moderation, coming to 2.8% (a fall from March 3.2% and Feb 3.5%). Australia’s first-quarter current account deficit widened to -2.9 billion from -2.5 billion expected.
The ECB holds its next policy meeting on Thursday, and we expected to keep interest rates unchanged though there is growing speculation it could shift to a more dovish footing.
In the America economic calendar, we await the US factory orders and weekly chain store sales data. The Chairman of the US Federal Reserve Powell is scheduled to deliver a speech.
Trading Perspective: In fx markets, soft optimism is the story today. The US dollar crushed to 97.03 on speculation over Fed rate cut after comments from the Federal Reserve on Monday raised expectations that the U.S. central bank is moving closer to a rate cut, while the Aussie dollar trades higher to 0.6990 despite the rate cut from the Reserve Bank of Australia. Kiwi also trades higher to the 0.6592 level as New Zealand has cut its budget surplus forecast for 2019/20 to NZD1.3bn.
GBPUSD continues the rebound which started from Friday low to 1.2660, but the bearish momentum for Cable is still intact amid growing concerns over Brexit. The pair hit the daily low at 1.2651 and the daily high at 1.2686. Major support now stands at the 1.26 recent low. On the upside, immediate resistance now stands at 1.27, the high from Friday. Sterling shows persistent weakness amid UK political uncertainty and also on the back of global risk aversion, so any uptick can match excess offers.
In Pound futures markets, the open interest shrunk by 854 contracts at the beginning of the week, while volume rose for the second session in a row, now by around 13.8K contracts.
EURUSD trades close to yesterday high amid broad USD weakness. The pair is adding to the bullish momentum build last Friday, and now an attempt to 1.12 looks possible. On the upside, the immediate resistance stands at 1.12, the high from Tuesday, while more offers will emerge at 1.1276, the 100-day moving average. Support stands at 1.1139, Asian session low, while more bids will emerge at the 1.12 round figure. We are following news from Italy as their budget deficit dispute with the European Commission continues, and the political turmoil in Austria and Greece.
In euro futures markets, the open interest shrunk by just 134 contracts, volume, in the same line, shrunk by around 28.8K contracts.
USDJPY fell to fresh 5 month lows below the 108 figure as traders looking for safe-haven assets. Today the pair hit the low at 107.84 and the high at 108.07. The pair will find support at 107.84 recent low. On the upside, immediate resistance for the pair now stands at 108 and then at the 50-hour moving average at 108.27.
In Yen futures markets, open interest shrunk by 1.3K contracts on Monday, reversing two consecutive daily builds, volume dropped by more than 46K contracts.
USDCAD faces strong pressure down to 1.3430 as the retreat in crude oil prices, Canada’s main export item, seems to have added further weakness in the Canadian Dollar (CAD). The pair will find immediate support at the 50-day moving average around 1.3392 while extra support stands at 1.3300 round figure. On the upside, immediate resistance stands at the 1.36 zone before an attempt to YTD high.
