Global stocks rebound on fiscal stimulus hopes

Global stocks bounced back today as traders started to price-in fiscal stimulus. In the US, Donald Trump floated a new stimulus that could include payroll tax relief and legislation to protect hourly workers. Additionally, banking regulators asked lenders to work constructively with borrowers. In Italy, the government got a nod from the European Union to offer a stimulus to cushion the economy. This came a day after the country announced a nationwide quarantine to prevent the disease from spreading. The government will provide about $8 billion to help people and businesses manage the disruption. Just last week, the South Korean government announced a $9.7 billion stimulus package. In the US, futures tied to the Dow, S&P500, and Nasdaq rose by more than 3%.

The price of crude oil rose today as traders reflected on the ongoing tensions between Russia and Saudi Arabia. Traders believe that the stimulus package offered by governments will help increase demand. They also believe that Russia and Saudi could come to an agreement to reduce tensions. Still, the price remains close to the lowest level since 2016 and there is a possibility that the two countries will not reach an agreement. Today Saudi Arabia escalated tensions by announcing plans to supply 12.3 million barrels per day in April. This is above the current production level of 9.7 million. 

The euro declined today as traders focused on the upcoming meeting by the European Central Bank (ECB). The bank’s officials will begin their monetary policy meeting tomorrow and release their rates decision on Thursday. In the report, traders will want to hear from Christine Lagarde on likely measures to cushion the economy. Today, we received the final fourth quarter data. The economy expanded by 1.0% in the quarter while employment change grew by 0.3%. 

EUR/USD

The EUR/USD pair declined to an intraday low of 1.1330, which is lower than yesterday’s high of 1.1496. On the four-hour chart, the price is above the 14-day and 28-day exponential moving averages. The ATR has continued to rise while the Chaikin Oscillator has declined. The price is above the Ichimoku cloud. The pair may continue showing volatility ahead of the ECB decision.

XTI/USD

The XTI/USD pair rose to an intraday high of 34.25. The price is above yesterday’s low of 27.48, which was the lowest level since 2016. On the four-hour chart, the price is attempting to fill the gap that was created as the price declined yesterday. Volatility has increased as evidenced by the average true range and the Bollinger Bands below. The pair may resume the downward trend as traders price-in additional supplies from OPEC and non-OPEC members.

GBP/USD

The GBP/USD pair declined to an intraday low of 1.3013. This price was below yesterday’s high of 1.3200. The price is below the short and medium-term moving averages while the jaws, teeth, and lips of the Alligator indicator have made a bearish crossover. The RSI has moved from a high of 77 to the current 45. The pair may continue moving lower during the American session.