Aussie drops as business confidence tanks in March
The Australian dollar eased slightly as the market reacted to the falling business confidence from the country. Data from the National Bank of Australia (NAB) showed that business confidence and business survey declined to their lowest level since the last financial crisis. This is mainly because most businesses have been forced to remain inactive during the shutdown. Still, there are signs that business activity will improve. First, the Australian government has started to partially open-up the economy. Second, trade numbers from China showed that exports and imports improved significantly in March. This could lead to more demand for Australian goods and services.
The sterling declined slightly ahead of the scheduled Brexit negotiations. The virtual meeting will happen between Michel Barnier and David Frost, the two main figures in the talks. The goal will be to set the dates for the upcoming rounds of virtual meetings between the two sides. The talks are already behind schedule because of the coronavirus pandemic. According to the Financial Times, three rounds of negotiations were supposed to have happened at this stage. Still, tomorrow’s meeting will not address whether the UK will request for an extension of the post-Brexit period beyond December.
European stocks were mixed today as investors waited for more direction on when the economy could reopen. Investors were also waiting for the earnings results from the United States. The German DAX rose by 1% while the FTSE and CAC fell by 0.45% and 0.20% respectively. In the United States, futures tied to the Dow Jones and Nasdaq rose by 260 and 110 points respectively. Johnson & Johnson was the first big company to release its earnings. Its net earnings rose to $5.8 billion, or $2.17 per share. This was higher than what analysts were expecting. The company also slashed its forward guidance because of the coronavirus concerns. Meanwhile, JP Morgan’s profit dropped by 69% in the first quarter as the company warned of a deep recession.
The EUR/USD pair was mixed today as investors started to focus on corporate earnings and the reopening of major economies. The pair is trading at 1.0940, which is slightly lower than the intraday high of 1.0957. The pair is still between the channel shown in green below. The price is also along the middle line of the Bollinger Bands while volatility has risen. The pair may remain at the current levels as there is no major economic data scheduled today.
The GBP/USD pair declined slightly as investors waited for tomorrow’s negotiations. The pair is trading at 1.2550, which is a few pips below the day’s high of 1.2580. On the four-hour chart, the index has moved above the 61.8% Fibonacci Retracement level. This means that the pair may continue rising and possibly test the 78.6% retracement level of 1.2725. The alternate scenario is where the pair moves lower to retest the 50% Fibonacci level at 1.2300.
The AUD/USD pair eased slightly after the weak business confidence data. The pair is trading at 0.6390, which is slightly below the day’s high of 0.6445. It is also along the 14-day exponential moving average while the RSI has moved slightly below the overbought level of 70. The pair is also trading above the Ichimoku cloud. The pair may continue rising and possibly test the important resistance level of 0.6500.