Stocks Rebound On Central Banks Monetary Stimulus Speculation  

Nikolas Papas

Nikolas has been involved in the finance industry for over fifteen years spanning across Europe and USA with a depth of knowledge and experience within many aspects of the financial markets. Nikolas gained several years experience with some of the Europe’s leading Brokers, as equity analyst, and trader managing accounts for both Private and Corporate Investors. He enjoys both the fundamental and technical aspects of trading focusing on stock markets and all FX majors. Currently Nikolas provides analysis and comments to online financial publications. Educational background in Economics (BSc), and Finance (MSc).

gold consolidates

Stocks Rebound On Central Banks Stimulus Speculation  

March 4, 2020
monetary stimulus
Monetary stimulus

Asian stocks managed to close mostly higher today on central banks’ monetary stimulus hopes amid the coronavirus outbreak.

Stocks rallied in the morning Asian trading session mirroring the strong rebound in Wall Street, but the indices gave up some of the gains. A slump in global economic activity due to coronavirus outbreak in over 50 countries around the globe has led global equities to lose over 10% in the previous week.

The Reserve Bank of Australia cut the interest rates by 25 basis points in an attempt to offset the impact of the coronavirus spread.   Bank of Japan and Federal Reserve signalled a policy response on Friday while Italy will inject more than 3.5 billion euros in the already battered economy. 

Nikkei 225 in Tokyo finished 1.22% lower at 21,082. The Shanghai Composite index closed 0.74% higher at 2992. The Singapore FTSE Straits Times closed up 0.55% at 3024. Hang Seng in Hong Kong ended 0.25% higher at 26351. The ASX 200 benchmark also managed to rebound and added 0.70% higher at 6435. 

European stocks started higher in the trading session. The German DAX is 2.09% higher at 12,108. CAC40 index is 1.73% higher at 5,425, while the FTSE MIB in Milan is 1.67% higher at 22,022. In London, the FTSE 100 is 1.89% higher at 6,781.  

In the commodities markets, the crude oil also managed to rebound today, the WTI crude oil is 1.50% higher at $47.44. Brent oil is 0.53% lower at $52.47 per barrel. The gold price also trades higher today. The precious metal is .50% higher at 1597. The gold outlook is bullish, and the first resistance will be met at $1,689 the recent high, while the support stands at $1,600 the recent low. Silver price is 0.35% higher at $16.77.    

The digital currencies retreat today and continue the consolidation above 8500.  Bitcoin (BTCUSD) is 1.77% lower at $8,752 hitting the daily low at $8,739 and the daily high at $8,960. Bitcoin’s technical outlook is neutral now as the cryptocurrency is trapped between the 50 and 100-day moving average. First support for BTCUSD stands now at $8,400 the low from Friday’s trading session. On the upside, the first resistance stands at 8960 the daily high and then at 10,495 the yearly top.

Ethereum (ETHUSD) trades 2.12% lower at 227.05 with capitalization at 25.03 billion. The initial resistance for ETHUSD stands at $274.18, the February high while the first support stands at $213.47 the February low. Ripple is 2.28 lower at 0.2337. Litecoin is 1.95% lower at 60.27. The crypto market capitalization stands now at $251.33 billion.

In the Lookout: The Switzerland Gross Domestic Product came in at 0.3% beating expectations of 0.2% in the fourth quarter. 

Japan Consumer Confidence Index registered at 38.4, below expectations (40.6) in February 

RBA cut interest rates by 25 basis points to 0.5%, from 0.75%. 

Trading Perspective: In the foreign exchange markets, the Aussie dollar is 0.32 higher at 0.6557 against the USD. The US dollar index is 0.11% higher at 97.61. NZDUSD trades 0.02% higher at 0.6261. The USDCHF pair is 0.14% lower at 0.9574.

EURGBP Retreat After Stronger  UK Construction PMI

EURGBP gives up 0.40% at 0.8693 after the United Kingdom Construction PMI came in at 52.6, topping the expectations of 48.8 in February. The January reading was at 48.4. On the other hand, the European Monetary Union Unemployment Rate came in at 7.4% in line with forecasts for January. The European Monetary Union Consumer Price Index came in at 1.2% in line with estimates for February. 

EURGBP stalled at the 200-day moving average for the second day in a row and now the sellers have the upper hand. The pair managed to rally the last four trading sessions from the four-month lows, after a series of positive economic data from Germany and the European Monetary Union

On the downside, the first support stands at 0.8682 the daily low, while more bids would emerge at 0.8594 the low from yesterday’s trading session. On the upside, immediate resistance for the pair will be met at 0.8740, the daily top. The next resistance area stands at 0.8813 the high from October 14, 2019. 

GBPUSD is 0.17% higher at 1.2777 after the stronger construction PMI from the UK. The British pound is under selling pressure the last two weeks as the UK authorities keep a hard stance on trade talks with the EU, stating that they were willing to operate without an agreement if they don’t achieve one in the next four months.

On the technical side, the first support for the GBP against the USD now stands at 1.28 low which if broken, might push the pair down towards 1.27. On the upside, the first resistance for GBPUSD stands at 1.32 and then at 1.3511 recent high.

EURUSD trades 0.20% lower at 1.1112 retreating from seven-week highs as investors book some profits after the recent rally amid bets that the Fed will cut interest rates in the next policy meeting. Euro is also getting a hand from better manufacturing PMI’s from Germany and from the European Monetary Union. 

USDJPY Lower On Fed Interest Rate Cut Speculation

USDJPY is trading 0.32% lower at 107.94, having hit the daily low at 107.65 and the daily high at 108.52. US Dollar is under selling pressure amid speculation that the Federal Reserve will proceed with an interest rate cut to offset the economic impact of the coronavirus spread. 

On the technical side, the USDJPY pair will meet the first support at 107.65 the daily low. In case of a break lower more bids might emerge at 107.35 the low from yesterday’s trading session. On the other side, immediate resistance for the USDJPY pair now stands at 108.52 the daily high. More selling pressure would be met at 109.18 the 100-day moving average. All in all the momentum is negative for the pair and only a break above the 100-day moving average can cancel the recent bearish momentum. 

USDCAD is 0.37% higher at 1.3370. The USDCAD will meet first support at 1.30 the recent low while the next significant support stands at 1.29 mark. On the upside, strong resistance will be met at 1.3300. 

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