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Wha you need to know for Wednesday 11th March:

There was a focus on the spread of COVID-19 in Europe with Italy confirming 10,149 cases in a nationwide lockdown which has weighed on the euro as we build-up to the European Central Bank on Thursday. While data in the eurozone proved resilient, (GDP in the Eurozone grew by 0.1% QoQ in Q4, which was aligned with previously estimations, 1.0% YoY in Q4), traders are not banking on it and prospects of a rate cut from the ECB has started to finally weigh into the euro which gave back around 2% of its rally to the dollar on Tuesday. A recession in the wider EU economy now looks probable.

As for news from China, there are were some positive developments for markets to look on the brighter side for. President Xi made a visit to Wuhan in a sign that the worst is behind the province and the 14 hospitals it opened to cope with COVID-19 have been closed down. Then, on Wall Street, following a blood bath of a start to a session, benchmarks bounced back on the news that there will be a large fiscal stimulus package coming from the White House. Trump said he would announce more details and discuss “a possible payroll tax cut or relief, substantial relief, very substantial relief, that’s big, that’s a big number,” the Associated Press reported.

At the same time, Russia has started to show intentions to restart talks but Saudi still plans to lift supply next month which also helped to lift the mood on Wall Street.

Markets in focus

  • WTI lifted 8.3% following a 25% fall yesterday.
  • The Dow Jones Industrial Average added around 1,163 points, or 4.9%, to end at 25,014, the S&P 500 SPX finished around 135 points higher, up 4.9%, near 2,882 and the Nasdaq Composite ended around 8,344, up 394 points, or 5%. 
  • Consequently, gold fell by 1.2%.
  • European stocks all fell overnight with the DAX down 1.0%, and the FTSE down 0.1%.
  • The US 10-year yield and oil prices both rebounded somewhat overnight. Russia has shown signs it may be willing to restart talks but Saudi still plans to lift supply next month.

FX price action

As per yesterday’s analysis,  DXY: It may only be a matter of time when US dollars are back by popular demand, due to the come back, the standout performer on the day was the US dollar with the DXY rallying to complete a 38.2% Fibonacci retracement of the Feb decline. Close behind was the CHF, EUR, GBP, while the Yen, CAD and AUD were the joint laggards. 

DXY holding in on a 23.6% Fibo retracement, ECB in focus

EUR/USD Price Analysis: Euro easing from multi-month tops, approaching 1.1300 figure

EUR/GBP bears pressuring price below 50% mean reversion target

GBP/USD Price Analysis: Pound loses 200 pips from March’s highs vs. dollar

USD/CHF advances to fresh daily highs near 0.9370 on renewed USD strength

AUD/USD Price Analysis: Aussie drops on USD demand, nearing 11-year lows

USD/JPY Price Analysis: Dollar off three-year lows vs. yen, trades sub-104.00 figure

USD/CAD climbs to 1.3750 area as oil starts to pull away from highs

Day ahead

It is a light calendar in Asia, but w do have Reserve Bank of Australia’s Debelle speaking as well as Australian Home Loans data and Consumer Confidence. It should be noted that while the data is second tier, yesterday’s Business confidence and conditions disappointment were enough to set off the downtrend in AUD which went on to suffer a 1.88% decline.

 

 

 

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