Dow futures fall as Boeing problems intensify
Shares of Boeing declined sharply in the premarket as new evidence started to stream in. Yesterday, the Chief Executive of Ethiopian Airlines said that data from the black box and the voice recorder showed that there was a similarity in the way the way the Ethiopian plane crashed with that of the Lion Air. This was confirmed by Boeing, which said that a new software update will be installed and pilots retrained on it. At the same time, the department of justice and the inspector general of the transport department is also investigating the company. This is after it emerged that the FAA had delegated the inspection of the Boeing 737-Max to Boeing. All this news, coupled with the fact that Boeing will interrupt its business means that its investors could see a few months of volatility. The same is true for the Dow, which declined by 40 points in the premarket.
The Japanese yen strengthened slightly against the USD even after the weak trade data from the country. The numbers showed that exports declined by 1.2% in February. This was the third month of straight declines and happened at a time when the world is going through a trade conflict. Imports too declined by 6.7%, which was a sharper decline than the expected 5.8% decline. The two metrics led to an increase in the trade surplus, which increased by ¥339 billion. This data comes almost two weeks after trade data from the US showed that the deficit had grown to a 10-year high. On a positive note, the country’s industrial production declined by 3.4%, which was better than the expected decline of 3.7%.
The USD weakened against the Swiss Franc ahead of the Fed and SNB decisions expected later this week. The Fed will release its interest rates decision on Wednesday while the SNB will follow on Thursday. The two central banks are expected to leave rates unchanged, with the Fed expected to issue a dovish statement. The SNB on the other hand faces a major challenge because the country’s economy and inflation have continued to weaken. The export sector, which is its most important, also continues to shrink as the currency strengthens against the dollar.
After reaching a YTD high of 1.0125, the USD/CHF pair has been on a downward trend. Today, it reached a low of 0.9997, which is three pips below the parity level. On the four-hour chart, the pair’s price is below the 21-day and 42-day moving averages. The price is also below the blue diagonal trend line shown below. The Average True Range (ATR) indicator has also been declining. There is a possibility that the pair will be a bit active this week as traders receive the data from the Fed and SNB.
The EUR/USD pair crossed the important resistance level of 1.1350 as the upward momentum started on March 7 continued. The pair reached a high of 1.1362, which is the highest level since March 4. The current price of the pair is along the upper band of the Bollinger Bands. The RSI has moved above the important overbought level of 70, while the Parabolic SAR indicator is below the price. The pair could continue the upward trend until the Fed makes its decision.
The Dow index will likely have a lower open as Boeing continues to affect its performance. The company has a market capitalization of more than $241 billion, which makes it the 15th largest company. In the past week alone, its valuation has lost more than $30 billion in value since the crisis started. On the hourly chart, the pair is along the 21-day and 42-day moving averages while the RSI has remained relatively unmoved. The index will likely start the day lower and pare those gains as the American session goes on.