Asian stocks for one more day finished mixed amid concerns of slower global growth, Brexit complications and US-China trade talks remain in focus. In Japan, the Nikkei225 main index lost 0.23 percent after hitting yesterday’s five-week low, to 21,378, and the Hang Seng benchmark in Hong Kong finished 0.57 percent higher at 28,736. The Shanghai Composite finished 0.85 percent higher at 3,022 and in Singapore, the FTSE Straits Times index gained 0.26 percent at 3,208. The Australian equities recovered today to close at intraday highs, with the ASX 200 index lifting by just 0.1 percent at 6,217.
In commodities markets, Light Crude Oil gained some ground and trades at 59.90. Brent oil also trades higher to $68.20/barrel. Gold retraced back to $1313 after hitting the high at $1318 during the Asian session. XAUUSD’s immediate resistance stands at the previous high at $1323 while more offers will be found at the 1330 zone. The precious metal may find support at $1309 where the 200-day moving average crosses and the low from yesterday, ahead of testing the $1300 round figure. The yield on the benchmark 10-year Treasury rose as high as 2.432 %, from Monday’s 15-month low of 2.377%, with three-month bills yielding 2.461 percent. The curve inversion worried investors as this phenomenon has preceded every U.S. recession in the last 50 years, signaling a dramatic selloff in global equities markets.
A cautious positive start for equities in early European session mirroring the improved sentiment seen in US equity futures, with investors eyes on ECB’s Draghi speech and watching the developments surrounding Brexit, DAX30 gains 0.03 percent to 11,418, CAC40 is 0.06 percent higher at 5,304 while FTSE100 in London is 0.12 higher at 7,204.
On the Lookout: An Italian news source is saying that the Italian government is ready to revise the 2019 GDP growth forecast to 0.1%. The source said that the 2019 deficit is seen around 2.4% of GDP.
In our calendar today we have the release of France’s February PPI and March consumer confidence, the UK’s March CBI retailing sales data, along with the latest weekly mortgage applications, January trade balance and 4Q current account balance all in the US.
In Central Bank Calendar, we have a busy day for ECB speakers with President Draghi, Vice-President Guindos and governing council members: Nowotny, Praet, Lautenschlaeger, Mersch and Villeroy all due to speak during the day at different events in Frankfurt, Vienna and Geneva.
Interest rates Market expectations: For the Fed, markets don’t expect any further rate hike in 2019, down from two rate hikes previously, and now see only one hike in 2020. Traders keep pricing in the first ECB rate hike at some point in H2 2020.
Trading Perspective: In forex markets, AUDUSD is trading lower below 0.71 mirroring the Kiwi, (NZDUSD) which nose-dived after the Reserve Bank of New Zealand (RBNZ) abandoned its long-standing neutral stance and turned dovish, saying that the next move in interest rates would likely be down. NZDUSD is currently trading at 0.6799 having lost over 140 pips during the Asian session. The US dollar index is adding pips for the fourth straight session and now is trading at 0.9632 after bottoming out in the 95.70 region in the wake of the dovish FOMC event last week.
GBPUSD just broke above the 1.32 area with the short term technical picture still neutral for Sterling. On the downside, major support will be found at 1.3057 where cross the 50-day moving average while more protection can be found at 200-day moving average around 1.2982. On the flip side, major resistance can be found at 1.3167 where the 50-hourly moving average stands, and then at 1.3232 the cross point of 100 and 200-hourly moving averages while 1.3382, the yearly high, will be met with strong supply.
In GBP futures markets, traders trimmed once again their open interest positions by nearly 1.9K contracts on Tuesday from Monday’s final 144,846 contracts. Volume followed suit, down for the third consecutive session, this time by around 3.5K contracts.
EURUSD lost the 1.13 level after rejected at the 1.1330 zone with traders waiting for ECB President Mario Draghi’s scheduled speech in Frankfurt. The pair looks vulnerable as it fails to make any rebound on worse US economic news. Euro will find immediate resistance at the 200-hour moving average at 1.1338 and is looking to break above in order to establish a new bullish trend targeting the yearly high at 1.1570. The low from Asian session at 1.1249 provides solid support, and further protection can be met at the horizontal support line at 1.1236 before a move to test YTD low at 1.1180.
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, open interest rose for the second session in a row, this time by more than 1.2K contracts on Tuesday from Monday’s final figures. In the same line, volume increased by around 10.5K contracts, partially reversing the previous sharp drop.
USDJPY trades positive at 110.57 regaining the 50-day moving average and giving bulls the upper hand. Major support for the pair stands at 110 round figure. Immediate resistance for the pair stands at 111 round mark and then at the 111.19 where the 100-day moving average crosses, followed by 111.49 the 200-day moving average stands.
Open interest in JPY futures markets decreased by just 632 contracts on Tuesday vs. the previous day. The volume decreased by around 9K contracts, recording the second drop in a row at the same time.