Stock Markets Rebound, AUDUSD Outperforms

Asian markets rebound today after yesterday’s plunge as traders keep an eye around the US-China trade developments after US President Trump threatened to more than double tariffs on US$200bn in Chinese imports from 10 percent to 25 percent.

The Nikkei225 lost 1.51 percent to 21,923 as it reopens after the 10-day break. The Hang Seng benchmark in Hong Kong finished 0.66 percent higher at 29,400. The Shanghai Composite added 0.81 percent to 2,929, while in Singapore, the FTSE Straits Times index finished 0.95 percent higher at 3,321. Australian stocks finished the session in green, but however, lost some earlier gains after the RBA left the cash rate on hold. The ASX200 closed 12 points higher or 0.2% to 6,295, having been up almost 50 points at lunchtime.

European session also rebound mirroring Asian indices and US futures, the DAX30 is 0.07 percent higher to 12,297 and CAC40 is 0.06 percent higher at 5,486 while the FTSE MIB in Milan is underperforming and trading 1.12 percent lower at 21,508. The London Stock Exchange is adding 0.33 percent to 7,356.

In commodities markets, crude oil recovers 0.19 percent and as of writing the black gold is trading at 62.36 after Trump’s threats to China and geopolitical tensions as the US dispatched bombers and an aircraft carrier to the Middle East over the weekend over concerns that Iranian proxy forces were preparing to possibly attack U.S. forces in the region. Brent oil is also trading higher at $71,15 per barrel. Gold consolidates around the 1280 level after the rebound from lows on Friday. XAUUSD’s technical picture is negative and now the support stands at the 200-day moving average down to $1251, which if broken can accelerate the downward move to 1200 as sellers will take full control. Strong resistance stands at 1291 and the 100-day moving average, and then the $1300 round figure.

BTCUSD Hourly (H1) Chart

In cryptocurrencies market, Bitcoin (BTCUSD) whose market capitalization accounts for more than half of all other cryptocurrencies combined trades higher for a fourth straight day at the 5,866 mark making new high and further enhancing the bullish outlook. The daily low for BTC was at 5,664 and the daily high at 5,956. BTCUSD’s immediate support stands at the 50-hour moving average at 5,684 while next strong support stands at the $5,515 level the 100-hour moving average and then at the 5000 round figure. On the upside, strong resistance stands at 5956 the recent high before challenging the 6,000 mark. Ethereum (ETHUSD) is adding more than 15 dollars at 175, holding well above the 50-day moving average at 138, and facing the immediate resistance at 185, the 200-day moving average, while Litecoin (LTCUSD) trades also higher at 75.84. The crypto market cap holds above $172.0B.

On the Lookout: The Reserve Bank of Australia (RBA) left its Official Cash Rate (OCR) unchanged at 1.50%, where it’s been since August 2016. Board members said they will be “paying close attention to developments in the labour market at its upcoming meetings.  Australia’s trade surplus dropped 4% in March, to a seasonally adjusted $4.95 billion (consensus $4.49 billion). The Australian retail sales also beat economist’s expectations.

In the North Atlantic economic calendar we have the US JOLTS job openings data for the month of March will be reported at 14:00GMT, followed by the Canadian Ivey PMI release and New Zealand’s fortnightly dairy auction results. We also have speeches by the FOMC member Quarles and BOC Chief Economist Haldane scheduled at 15:35GMT and 16:30GMT respectively. At 20:30GMT, crude oil traders will eagerly await the US API weekly crude stocks data.

AUDUSD Hourly (H1) Chart
AUDUSD Hourly (H1) Chart

Trading Perspective: In forex markets, the US dollar is down 20 cents to 97,15, flirting with daily lows as traders digest the developments in US-Sino trade war. A stronger US dollar will likely increase the US trade deficit, adding risk that Trump administration continues to target those nations with a significant trade surplus with the US (China – Germany – Europe). The Aussie dollar trades higher at 0.7040 as RBA kept interest rates unchanged. Kiwi failed to mirror Aussie dollar higher and trades at 0.6612 as traders renewed RBNZ rate cut bets following New Zealand’s jobs data disappointment and weaker oil prices.

GBPUSD consolidates at 1.3124 for the second day hitting the daily high at 1.3130 and the low at 1.3085. On the downside, major support will be found at 1.2967 where the 200 and 100-day moving averages cross and then at 1.2830 the support line from February. On the upside, immediate resistance stands at 1.3104, the 50-day moving average. Brexit will be in focus again as investors return to their trading desks after the Bank holiday on Monday, with a number of Conservatives threatening to attempt to oust Prime Minister Theresa May.

In Pound futures markets, the open interest dropped by almost 5K contracts on Monday according to advanced figures from CME Group. In the same direction, volume shrunk by around 64.6K contracts after two builds in a row.

EURUSD trades in 20 pips narrow trading range at 1.1210 after the dovish stance from Fed last week. The pair made the Asian high at 1.117 and the low at 1.1191. Immediate support can be found at 1.1180, the 200 hours moving average, while more solid support can be found at the yearly low at 1.1115. On the upside, the immediate resistance stands at 1.1236 the bottom of horizontal resistance line from the three-month trading range, while more offers will emerge at 1.1268, the 50-day moving average.

In the euro futures market, open interest added nearly 800 contracts on Monday to their open interest positions, while volume reversed by around 86.4K contracts after two consecutive daily builds.

USDJPY started the week with a gap down on renewed China-USA trade worries to 110.27 and from that time started a rebound to 110.70. Today the pair hit the low at 110.54 and the high at 110.84. The pair will find support at 110.27, the March 2019 low. On the upside, immediate resistance for the pair stands at 111.68, the 50-hour moving average, and then at 112.18, the April 2019 high.

In Yen futures, the open interest decreased by nearly 2.6K contracts on Monday from Friday’s final 202,185 contracts. The volume rose for the second straight session, this time by around 34.3K contracts.

USDCAD retreats from yesterdays high at 1.3475, trading at 1.3421 as stronger prices in crude oil seem to have added further weakness in the Canadian Dollar (CAD). The pair will find immediate support at the 100-day moving average around 1.3335 while extra support stands at the 1.3300 round figure. On the upside, immediate resistance stands at 1.3493, the Asian session high, while a break above can escalate the rebound towards the 1.35 round figure.