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China Stocks Rally

Downward Pressures Resume Despite Fed Interest Rates Cut

March 17, 2020

rates cutAsian stocks finished lower on Monday after the Fed cut the benchmark interest rate to zero and announced a massive quantitative easing program in an emergency move. The new fed funds rate will now be at 0% to 0.25% down from a previous range of 1% to 1.25%.

Above that, in a coordinated move by central banks, the Fed said the Bank of Canada, the Bank of England, the Federal Reserve, the Bank of Japan, the European Central Bank, and the Swiss National Bank took action to enhance dollar liquidity globally through existing dollar swap arrangements. Fed Chair Powell said that the Fed will maintain the interest rates at this level until they are confident that the economy has weathered recent events and is on track to achieve the maximum employment and price stability goals. 

Nikkei 225 index finished 2.46 lower at 17,002. The Shanghai Composite index closed 3.15% lower at 2795. The Singapore FTSE Straits Times is 3.98% lower at 2529. Hang Seng in Hong Kong was 3.95% lower at 23085. The ASX 200 index lost 9.70% at 5002 in the worst single-day fall since 2008. 

European indices tumble on Monday trading. The German DAX is 7.80% lower at 8,514. CAC 40 index is 8.82 lower at 3,754, while the FTSE MIB in Milan is 7.93% lower at 14,650. In London, the FTSE 100 is 5.93% lower at 5,047.  

In the commodities markets, the crude oil price resumed the downward move amid the price war between Saudi Arabia and Russia and slower global demand. WTI crude oil is 5.04% lower at $30.15, while the Brent oil is 11.73% lower at $30.92 per barrel. 

The gold price after a positive start returned to negative territory as the sell-off continues across the board. As of writing, gold is 1.75% lower at 1503. The gold price first resistance stands at $1,703 the recent high, while the support stands at $1,498 the daily low. The silver price plunged 11.81% at $12.94.    

Cryptocurrencies are under heavy selling pressure as liquidation of all assets accelerates by midday. Bitcoin (BTCUSD) is 15.28% lower at $4,538, hitting the daily low at $4,431 and the daily high at $5,764. Bitcoin’s technical outlook is clearly bearish as the cryptocurrency makes consecutive lower lows and lower highs. Immediate support for BTCUSD stands now at $4,431, the daily low. On the other side, the first resistance is seen at 6,000 mark and then at 9,123 Friday’s high. The next supply zone will be met at 10,495, the yearly top.

Ethereum is 15.83% lower at 103.50, with capitalization at 11.71 billion. The first resistance for Ethereum stands at $123.81, the daily high, while the first support stands at $102.00 today’s low. Ripple (XRPUSD) is 14.02 lower at 0.1310. Litecoin (LTCUSD) is 17.66% lower at 29.95. The crypto market capitalization stands now at $132.81 billion.

In the Lookout: The China Industrial Production came in at -13.5% below the forecasts of 1.5% in February, the Retail Sales came in at -20.5%, below the expectations of 0.8%. 

People’s Bank of China has set the Yuan (USDCNY) reference rate at 7.0018 versus yesterday’s fix at 7.0033. 

Trading Perspective: In the foreign exchange markets, Japanese Yen rallies against the U.S. Dollar USDJPY is 2.02% lower at 0.9431. The Aussie is 0.21% lower at 0.6169 against the greenback. The U.S. dollar index is 0.85% lower at 97.85. NZDUSD trades 0.17% lower at 0.6055.

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