Posted at 01 April 2020 / Categories Market Roundups
Economic Data Ahead
Key Events Ahead
DXY: The dollar index surged after the U.S. Federal Reserve in its latest measure to combat the economic fallout from the coronarvirus pandemic, established a temporary repurchase agreement facility to allow foreign central banks to swap any Treasury securities they hold for cash. The greenback against a basket of currencies traded 0.4 percent up at 99.37, having touched a low of 98.27 on Friday, its lowest since Mar. 17.
EUR/USD: The euro eased, extending losses for the third straight session, as investors sentiment weakened after Eurozone inflation slowed sharply in March, a first estimate showed on Tuesday, weighed down by an oil price war between Russia and Saudi Arabia and the coronavirus pandemic. The European currency traded 0.1 percent down at 1.1020, having touched a high of 1.1147 on Friday, its highest since March 17. Investors’ attention will remain on a series of data from the Eurozone economies, EZ employment rate and EZ Markit manufacturing PMI, ahead of the U.S. ADP employment change, and manufacturing PMI by both Markit and ISM. Immediate resistance is located at 1.1065 (50% retracement of 1.1495 and 1.0635), a break above targets 1.1103. On the downside, support is seen at 1.0954, a break below could drag it below 1.0926.
USD/JPY: The dollar declined, hovering towards a 1-week low hit earlier in the week after data showed that U.S. consumer confidence dropped to a near three-year low in March as households worried about the economy’s near-term outlook amid the epidemic. Moreover, the selling pressure intensified around the pair after Goldman Sachs projected a real GDP sequential decline of 34 percent in the United States this quarter, on an annualized basis, compared with an earlier estimate of a 24 percent drop. The major was trading 0.05 percent down at 107.42, having hit a low of 107.12 on Monday, its lowest since Mar. 18. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. ADP employment change, and manufacturing PMI by both Markit and ISM. Immediate resistance is located at 108.30, a break above targets 108.78 (5-DMA). On the downside, support is seen at 106.90, a break below could take it near at 106.75.
GBP/USD: Sterling tumbled below the 1.2400 level as the U.S. currency gained strength due to its safe-haven properties amid the spread of the coronavirus. The British pound is likely to remain fragile as a survey showed confidence among British companies slumped in the second week of March, while the rating agency Fitch cut Britain’s sovereign debt rating last week. The major traded 0.6 percent lower at 1.2334, having hit a high of 1.2485 on Friday, it’s highest since March 13. Investors’ attention will remain on the geopolitical developments ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2516 (61.8% retracement of 1.3200 and 1.1406), a break above could take it near 1.2600. On the downside, support is seen at 1.2270 (5-DMA), a break below targets 1.2202. Against the euro, the pound was trading 0.1 percent down at 88.95 pence, having hit a high of 88.11 on Tuesday, it’s highest since Mar. 12.
AUD/USD: The Australian dollar slumped as appetite for the safety of cash dollars was offset by aggressive liquidity measures from the U.S. Federal Reserve. On Tuesday, the Fed broadened the ability of foreign central banks to access dollars during the coronavirus crisis by allowing them to exchange their holdings of U.S. Treasury securities for overnight dollar loans. The Aussie trades 0.9 percent down at 0.6074, having hit a high of 0.6213 the day before, it’s highest since Mar. 16. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate resistance is located at 0.6234 (61.8% retracement of 0.6684 and 0.5506), a break above could take it near 0.6302. On the downside, support is seen at 0.6022, a break below targets 0.5959 (10-DMA).
Asian shares slumped as the coronavirus pandemic and the prospect of a global recession dented investor confidence.
MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.3 percent.
Tokyo's Nikkei plunged 4.5 percent to 18,065.41 points, Australia's S&P/ASX 200 index rose 3.6 percent to 5,258.60 points and South Korea's KOSPI fell 3.9 percent to 1,685.37 points.
Shanghai composite index declined 0.6 percent to 2,732.82 points, while CSI 300 index traded 0.3 percent down at 3,673.74 points
Hong Kong’s Hang Seng traded 2.7 percent lower at 22,871.73 points. Taiwan shares shed 0.5 percent to 9,663.63 points.
Crude oil prices declined following their biggest-ever quarterly and monthly losses, weighed down by fears of global oversupply as data showed a bigger-than-expected rise in inventories in the United States. International benchmark Brent crude was trading 0.4 percent lower at $25.63 per barrel by 0538 GMT, having hit a low of $21.64 on Monday, its lowest since March 2002. U.S. West Texas Intermediate was trading 1.1 percent up at $20.31 a barrel, after falling as low as $19.29 on Monday, its lowest since Feb. 2002.
Gold prices recovered from a steep fall in the previous session as the U.S. dollar eased following the Federal Reserve’s latest stimulus boost. Spot gold was trading 0.6 percent up at $1,587.44 per ounce by 0541 GMT, having touched a high of $1644.43 on Thursday, its highest since Mar. 12. U.S. gold futures slipped 0.3 percent to $1,591.30.
On Tuesday, the benchmark 10-year yield was up less than a basis point at 0.6742 percent, while the two-year U.S. Treasury yield was up less than a basis point at 0.2358 percent.