Asian Session – China injects $586 Bn stimulus package

Market Brief

Asian markets really took to the news that the Chinese government has announced a $586 Bn (4 Trillion Yuan) rescue package to stimulate the domestic economy. The package was said to be aimed at strengthening fiscal policy and some targeted support for the property market. The news bode well with the region, the Nikkei 225 up 5.5%, after declining sharply in the previous 2 sessions. The S&P/ASX 200 rose 1.3% to 4’103.80 while the RBA revised down their GDP growth forecast. Taiwan’s Taiex fell 0.4% to 4’725.03 despite its fourth interest rate reduction in 2 months. The Hangseng had a strong showing, rising 3.4% to 14’726.59.

Overnight the currency moves were quiet to say the least, despite large moves in equity markets. EURUSD moved from a low of 1.2820 to a high of 1.2898 as the Euro continues to strengthen after the ECB finally cut rates last week. However, Obama euphoria, rate convergence and demand for more liquid assets may continue to support the dollar in the build up to next Saturday’s global leader’s summit on the financial crisis in Washington.
The USDJPY traded from a high of 99.25 to a low of 98.82, while the EURJPY leaped 200 pips in thin markets – mainly on Euro strength.

The major news today really is the Chinese stimulus package announcement, the IMF hailing the move and saying it would help restore global financial sentiment as central banks around the world pull together to avoid further escalation of the financial crisis. The recent efforts by Central banks to cut interest rates and provide liquidity to their respective economies has done well to quell consumer sentiment and the general outlook on what is a serious situation. The British Chamber of commerce applauded the BoE’s deep rate cut last week and billed it as constructively.

On the commodity front, crude oil prices rebounded, appreciating 2.5% overnight to $63.50/bbl. Gold gapped $18/oz on the upside this weekend, while Silver rose 20 cents over the weekend. The Vix index dropping substantially as we regain calmer markets.

Currency Tech

AUDUSD
R 3: 0.7357
R 2: 0.7240
R 1: 0.7065
CURRENT: 0.6878
S 1: 0.6550
S 2: 0.6339
S 3: 0.6011

EURJPY
R 3: 131.50
R 2: 131.05
R 1: 127.72
CURRENT: 127.58
S 1: 122.25
S 2: 121.40
S 3: 113.65

USDSGD
R 3: 1.5160
R 2: 1.5147
R 1: 1.5079
CURRENT1.4901
S 1: 1.4645
S 2: 1.4585
S 3: 1.4555

• S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot