DAX index falls after Wirecard finds €1.9 billion missing
The DAX index declined today as investors continued to worry about Wirecard, the payment giant. The company’s share price declined by more than 50% after it postponed the release of its financial statements for the second time. This decision came after the company said about €1.9 billion was missing. The company has been in trouble since last year when the Financial Times started publishing details about its relationship with its third parties. This prompted an investigation by KPMG, which cleared the firm of any wrongdoing. It is also being investigated by BaFin, the financial regulator in Germany. The firm now has a market capitalization of above €4 billion, which is lower than its peak valuation of €24 billion.
The Swiss franc was little changed after the Swiss National Bank delivered its interest rate decision. The bank decided to leave rates unchanged at -0.75% after two days of deliberations. It also said that an expansive policy was needed to tackle the challenges posed by the coronavirus pandemic. The bank now expects that the economy will drop by 6% this year, the worst performance since the 1970s. In a statement, the bank said that it will be ready to intervene in the market if the outlook dims. It also said that negative interest rates provided favorable financing conditions for businesses and the public sector.
The British pound declined slightly after the Bank of England delivered its interest rate decision. As was widely expected, the monetary policy committee voted unanimously to leave interest rates unchanged at 0.10%. Also, the bank added £100 billion into its quantitative easing program. Meanwhile, in the United States, data from the Bureau of Labour Statistics showed that initial jobless claims rose by 1.5 million in the previous week. This was the lowest rise in initial jobless claims since March when the claims soared by more than 6.8 million. The continuing jobless claims declined from last week’s 20.6 million to 20.5 million.
The DAX index pared early gains after Wirecard postponed its financial statements. The index is trading at €12,319. On the four-hour chart, the price is along with the 50-day exponential moving average and slightly above the 100-day EMA. It is also above the 61.8% Fibonacci retracement level while the RSI has flattened around 50. Still, the price is on an upward trend as supported by the white line. This means that the price may continue rising as bulls attempt to test the important resistance of €12,650.
The GBP/USD pair declined slightly after the BOE delivered its rate decision. The pair is trading at 1.2505, which is slightly higher than the day’s low of 1.2477. On the four-hour chart, the price is slightly below the 50-day and 100-day exponential moving averages. The signal line and histogram of the MACD is still below the neutral line while the RSI has been in a downtrend. The likely scenario is where the price continues to fall as bears attempt to move below 1.2400. The alternative scenario is where the pair moves upwards and crosses the 50-day EMA at 1.2630.
The EUR/USD pair was little moved today as traders reacted to US jobless claims data. It is trading at 1.1236, which is slightly above the low of 1.1227. On the four-hour chart, the price is slightly above the important support level of 1.1210. This is important support because it is the neckline of the head and shoulders pattern. It is also slightly below the 50-day EMA and along the 100-day EMA. This means that the pair may continue falling as bears attempt to move below 1.1200.