Antipodeans near 1-week peak, Dollar steadies against Yen as investors wait U.S. stimulus bill, Asian shares rally - Wednesday, March 25th, 2020
- Oil extends gains on optimism over U.S. stimulus
- Gold prices off highs
- Euro zone proposes 2% of GDP credit from bailout fund
Economic Data Ahead
- (0400 ET/0900 GMT) Germany IFO - Business Climate (Mar)
- (0400 ET/0900 GMT) Germany IFO - Current Assessment (Mar)
- (0400 ET/0900 GMT) Germany IFO - Expectations (Mar)
Key Events Ahead
- No Significant Events Scheduled
DXY: The dollar index declined as a deal to backstop the U.S. economy with a huge fiscal stimulus package promised to further ease some of the pandemic-driven demand for liquid cash. The greenback against a basket of currencies traded 0.3 percent down at 101.46, having touched a high of 102.99 on Friday, its highest since January 2017.
EUR/USD: The euro surge, extending gains for the fourth straight session, on news that Eurozone finance ministers broadly backed an idea that governments might apply for a precautionary credit line worth some 2 percent of their GDP from their ESM bailout fund to help them fight the economic impact of the coronavirus epidemic. But the final decision on the use of money from the European Stabilisation Fund (ESM) will be taken only by EU leaders at their tele-summit on Thursday. The European currency traded 0.2 percent up at 1.0810, having touched a low of 1.0635 on Monday, its lowest since April 2017. Investors’ attention will remain on a series of data from the Eurozone economies, ahead of the U.S. durable goods orders and housing price index. Immediate resistance is located at 1.0838 (23.6% retracement of 1.1495 and 1.0635), a break above targets 1.0964 (38.2% retracement). On the downside, support is seen at 1.0720, a break below could drag it below 1.0691.
USD/JPY: The dollar rose, hovering towards a 4-1/2 week peak hit in the prior session, as investors waited on a Senate stimulus bill meant to ease the economic impact of the spreading coronavirus, and after U.S. President Donald Trump pressed his case for a re-opening of the U.S. economy by mid-April. On Tuesday, Senior Democrats and Republicans said they were close to a deal on a $2 trillion coronavirus economic stimulus package. The major was trading 0.1 percent up at 1101.36, having hit a high of 111.71 on Tuesday, its highest since Feb. 24. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. durable goods orders and housing price index. Immediate resistance is located at 111.77, a break above targets 112.22. On the downside, support is seen at 110.38 (5-DMA), a break below could take it near at 109.22 ( (23.6% retracement of 101.18 and 111.71).
GBP/USD: Sterling gained as the greenback eased against a basket of currencies, supported by the UK Prime Minister Boris Johnson's stricter lockdown measures to combat the COVID-19 pandemic. The major traded 0.8 percent higher at 1.1853, having hit a low of 1.1409 on Thursday, it’s lowest since 1985. Investors’ attention will remain on the geopolitical developments ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2003 (10-DMA), a break above could take it near 1.2093 (38.2% retracement of 1.3200 and 1.1406). On the downside, support is seen at 1.1610 (5-DMA), a break below targets 1.1540. Against the euro, the pound was trading 0.4 percent up at 91.35 pence, having hit a low of 94.99 on Thursday, it’s lowest since Mar. 2009.
AUD/USD: The Australian dollar rallied to a 1-week peak, supported by a rise in the crude oil prices and hopes U.S. stimulus can save the global economy. U.S. Senate majority leader Mitch McConnell said the package, expected to be worth $2 trillion, had been agreed and would be put to a vote later on Wednesday. The Aussie trades 1.3 percent up at 0.5934, having hit a low of 0.5506 on Thursday, it’s lowest since Oct. 2002. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate resistance is located at 0.6095 (50% retracement of 0.6684 and 0.5506), a break above could take it near 0.6234 (61.8% Fib). On the downside, support is seen at 0.5820 (5-DMA), a break below targets 0.5770.
Asian shares rallied as U.S. Congress appeared closer to passing a $2 trillion stimulus package to curb the coronavirus pandemic’s economic toll.
MSCI's broadest index of Asia-Pacific shares outside Japan surged 1.3 percent.
Tokyo's Nikkei surged 8.1 percent to 19,546.63 points, Australia's S&P/ASX 200 index rallied 5.5 percent to 4,998.10 points and South Korea's KOSPI advanced 5.9 percent to 1,704.76 points.
Shanghai composite index rose 2.2 percent to 2,781.59 points, while CSI 300 index traded 2.7 percent up at 3,722.52 points
Hong Kong’s Hang Seng traded 3.4 percent higher at 23,423.41 points. Taiwan shares added 3.9 percent to 9,644.75 points.
Crude oil prices rose, extending gains for a third straight session, amid hopes Washington will soon approve a massive aid package to stem the economic impact of the coronavirus pandemic. International benchmark Brent crude was trading 1.1percent higher at $27.90 per barrel by 0629 GMT, having hit a low of $24.51 last week, its lowest since Sept. 2003. U.S. West Texas Intermediate was trading 2.4 percent up at $24.91 a barrel, after falling as low as $20.08 last week, its lowest since Feb. 2002
Gold prices declined in a volatile market as a flight to cash offset growing hopes for a massive U.S. economic stimulus to stem the coronavirus outbreak’s economic toll. Spot gold eased 0.9 percent to $1,613.12 per ounce by 0633 GMT, having touched a high of $1640.35 earlier, its highest since Mar. 12. U.S. gold futures climbed 0.5 percent to $1,668.60.
On tuesday, the benchmark 10-year yield was up 7 basis points to 0.837 percent, with the two-year yield up 9.4 basis points to 0.389 percent. The 30-year long bond yield was last up 4.7 basis points to 1.393 percent.