WALL STREET DECLINE CONTINUES AS TRADERS WORRY ABOUT GROWTH
The AUD/USD pair was unchanged today after the Reserve Bank of Australia (RBA) released the minutes for the monetary policy meeting held this month. The minutes showed that officials remained optimistic about the country’s economy. This was boosted by recent employment data, which shows a significant increase in the number of people employed. The GDP forecast was left unchanged at 3.5% for 2018 and 2019. It will start to ease at the end of 2020 as the Liquefied Natural Gas (LNG) exports reach capacity. Concerns remain about the low rate of inflation caused partly because of a large policy-induced decline in childcare prices. This month, the Aussie was the second-best performing currency after the Kiwi.
The Wall Street decline continued yesterday as global concerns rise. The biggest decline was in the technology sector, which dropped by 3.79% and was led by chip stocks like NVIDIA and AMD. Other big losers were companies like Apple, which has been cutting orders for the latest iPhones. The only bright spots were in the utilities and real estate industries. This decline will lead to contagion around the world today with the DAX and STOXX set to fall by 60 and 40 points respectively.
Sterling traded higher than yesterday’s intraday low of 1.2720. Its volatility increased as investors remained concerned about Brexit. Talks regarding the UK’s departure from the EU will continue today. Traders will also focus on BOE governor, Mark Carney, who is expected to be questioned by parliament. The governor will answer questions regarding inflation, and what he thinks about the Brexit talks so far.
The EUR/USD pair was little moved in the Asian session. The pair is trading at 1.1455, which is near the highest level since November 8. This level is close to the important support level of 1.1500. The double EMA indicators show that the pair will likely continue the upward trend, albeit at a slower rate. The RSI is at 65, which is relatively unchanged. While the upward trend could continue, the pair could also start declining as it nears a key resistance level.
The GBP/USD pair was little moved from yesterday’s close. The pair’s Average True Range (ATR), which measures volatility, declined sharply as shown below. The current price is along the 30 and 15-day exponential moving average. As it has done in the past one week, the pair will likely continue to react to the news on Brexit.
The Nasdaq index continued to decline led by Apple and chip stocks. In recent weeks, Apple’s market capitalization has dropped by more than $200 billion. The Nasdaq’s RSI is currently at 27 on the hourly chart below. The current price is below the 200 and 50-day EMA. The momentum indicator has also fallen sharply as shown below. There is a likelihood that it will get worse for the index before it gets better. The index will likely test the previous low of $6575 before starting to move up.