China-U.S. talks

USDJPY keeps the Upbeat Tone, Asian Indices Mixed

Asian indices finished mixed today following a solid start to the week on Monday. In Japan, the Nikkei225 index lost 0.44 percent to 21,726, and the Hang Seng in Hong Kong added just 0.04 percent at 28,977. The Shanghai Composite rising 0.90 percent at 3,054, the Aussie stocks have erased most of yesterday’s gains, hampered by falls in the Financial, Materials, and Healthcare sectors. The ASX 200 closed down 18 points or 0.3% to 6,199 – breaking a four-session winning streak.

In Wall Street at the close, the Dow Jones Industrial Average was down 0.79% at 25,819.65, while the S&P 500 had lost 0.39% to 2,792.81 and the Nasdaq traded 0.23% weaker at 7,577.57.

In commodities markets, the Crude oil lost 32 cents to $56.30/barrel while Brent oil fell 28 cents to $65.37 a barrel. Gold prices attempted a minor bounce near 1290 levels amid subdued Treasury yields, but rejected and currently, the precious metal is trading at $1285. US Dollar index is adding some pips above 96.70 outperforming in early European session all major currency pairs.

On the Lookout: The RBA at Tuesday’s March board meeting, left the official cash rate unchanged for the 31st month in a row, as was expected, at a record low level of 1.5% but noticed that the economic growth might have slowed in the second half of 2018.

The Chinese government made clear that removing tariffs on $200bn-worth of Chinese goods quickly was necessary in order to finalise any trade deal. One of the remaining sticking points is whether the tariffs would be lifted immediately or over a period of time.

On Tuesday the Euro macro calendar is a heavy-show, kicking-off with the Swiss February CPI report at 07:30 GMT. The February services PMI reports from across the Euro area economies, and the UK will dominate the headlines.

During the Wall Street session traders are looking for the releases of the services PMI from both Markit and ISM due at 14:45GMT and 15:00GMT respectively. Ahead of the PMIs, the US building permits will be released in at 12:30GMT and New Zealand’s GDT price index around 14:00GMT.

The main event today remains the BOE Governor Mark Carney’s testimony at 15:35GMT on Brexit, inflation, and the economy at the House of Lords Economic Affairs Committee, in London.

Trading Perspective: US dollar is holding firm while the Aussie dollar (AUDUSD at 0.7077) and kiwi (NZDUSD at 0.6791) are the laggards in narrow trading ranges affected by poor Chinese economic data once again as the European session kicks off.

USDJPY keeps the upbeat tone but is facing the 112 tough barrier ahead, and only a convincing break above can start a new bullish trend. Strong support stands at the 100 and 200-day moving average at 111.30 where demand will be strong.

USDJPY Daily Chart

In JPY futures markets the open interest and volume declined by 403 contracts and around 27.6K contracts, respectively on Monday.

GBPUSD is prolonging the rejection from last week’s 2019 tops beyond 1.3300 and currently trading at the 200-hour moving average canceling the short term bullish trend although long term uptrend holds well as the pair is far away from the reverting daily moving averages. I expect the pair to make an attempt to regain the 1.3208 level to reestablish the short term positive momentum.

Open interest in GBP futures markets shrunk for the third session in a row on Monday, this time by more than 3K contracts from Friday’s final 199,061 contracts, as per advanced data from CME Group. In the same line, the volume went down for yet another session, shrinking by nearly 42K contracts.

EURUSD offered bias is still intact for the pair as it approaches yesterday lows at 1.1310, and now it targets the support area at 1.1285 the low from January 24th, 2019, which if breached will drive prices down to yearly lows, a scenario that is not supported as the offers are diminishing below 1.13 level. On the upside, the common currency has to regain the 1.1352 figure where the 50 SMA in the hourly chart is crossing, to establish a short term uptrend.  

In Euro futures markets, traders added nearly 4.8K contracts to their open interest positions on Monday from Friday’s final 530,097 contracts. Same happened with volume, reverting the previous drop and advancing by almost 6.7K contracts.

asian indices
EURUSD Hourly (H1) Chart