Asian and European stocks rise as China pledges stimulus

Japanese stocks and yen declined today after the country’s statistics office released weak fourth quarter data. The number showed that the economy’s GDP shrank by 6% in the fourth quarter. This was the lowest pace of growth since 2014. This was worse than the expected decline of 3.7%. This weakness came in a quarter that the country initiated a new consumption tax. The country also released a $122 billion stimulus package in the quarter. The capital expenditure declined by 3.7% while private consumption declined by 2.9%. This was partially offset by a 0.5% increase in external demand. Nikkei dropped by 123 points while the yen eased by about 13 basis points. 

Asian and European stocks and American futures rose today as the market focused on coronavirus. The market is also anticipating that a new round of stimulus could help salvage the Chinese economy. Today, the China Council for the Promotion of International Trade issued 1,615 force majeure certificates worth more than $15 trillion. These contracts are set to shield companies from any legal impacts from the disease. The PBOC also reduced its medium-term financing by 10 basis points to 3.15%. This happened as the number of cases reported appear to be levelling-off. The number of confirmed cases has risen to more than 71k people. Deaths are more than 1,775.

The price of Bitcoin dropped sharply earlier today. The price moved below $9,000 for the first time in two weeks. There was no apparent reason for the sharp drop. Some analysts believe that this action was related to the calming tensions on coronavirus. They argue that China’s decision to stimulate the economy could reduce tensions. These traders believe that Bitcoin is a safe haven currency like gold. Still, the currency is one of the best-performing assets this year, having gained by more than 35%. 

EUR/USD

The EUR/USD pair was little moved today. This is mostly because of no news from the US and Europe. The US is observing the Presidents Day holiday today. The pair is trading at 1.0840, which is close to the lowest level since 2017. The pair appears to have found a support at the current level. This is evidenced by the short-term moving average shown in blue below. At this price, the pair may break out in either direction.

BTC/USD

The BTC/USD pair declined to an intraday low of 9525. This was the lowest level in two weeks. The price is below the 14-day and 28-day EMA. The short and medium-term moving averages have made a bearish crossover. The RSI has moved from a high of 79.80 to the current 34. The histogram of the MACD has moved below the centreline. While the pair may continue moving lower, there is also a possibility that the pair may resume the upward trend.

USD/JPY

The USD/JPY pair rose to an intraday high of 109.88. The pair has been rising since February 13, when the pair was trading at 109.61. The price is above the 14-day and 28-day EMA. The price is slightly above the 50% Fibonacci Retracement level. The price is slightly above the 14-day and 28-day exponential moving averages. The pair may continue moving higher on weak Japanese data.