The U.S. stocks posted a strong rebound after losing over 10% last week. Investors expected that central banks around the world would launch economic stimulus measures amid the impact of the coronavirus. Both Goldman Sachs and JPMorgan are now predicting the U.S. Federal Reserve to cut interest rates by 50 basis points in March.
The Dow Jones Industrial Average surged 1,294 points (+5.1%) to 26,703, the biggest point-gain for the index on record. The S&P 500 jumped 136 points (+4.6%) to 3,090, and the Nasdaq 100 rose 416 points (+4.9%) at 8,878. Shares in Food & Staples Retailing (+7.76%), Technology Hardware & Equipment (+7.69%) and Household & Personal Products (+6.11%) sectors were market leaders.
Later in the day, the focus will be on the G7 meeting as the officials of Canada, Italy, France, Germany, Japan, the U.K., and the U.S. are coming together to discuss the impact of coronavirus.
XAU/USD - Fibonacci Retracement In Play
On Tuesday, the precious metal gold prices surged as expectations rose for monetary policy easing by major central banks to reduce the economic radioactivity from the fast-spreading coronavirus. The central bankers around the globe seem to be in a rush to make interest rate cuts to deal with the coronavirus, and it's the potential impact on the market.
Regarding U.S. economic data, the Markit U.S. Manufacturing Purchasing Managers' Index (PMI) declined to 50.7 (50.8 expected), and the Institute for Supply Management's (ISM) Manufacturing PMI fell to 50.1 (50.5 expected). Construction Spending rose 1.8% on month in January (+0.6% expected) which is eventually weighting on the gold prices/
Later today, February auto sales will be reported (16.80 million vehicles expected). In the U.S., the coronavirus-related death toll has grown to six. South Korea reported a total of 4,335 cases (28 deaths), Italy 2,036 cases (52 deaths), and Iran 1,501 cases (66 deaths).
XAU/USD - Daily Technical Levels
|
Support |
Pivot Point |
Resistance |
|
1552.02 |
1597.26 |
1631.45 |
|
1517.83 |
1676.69 |
|
|
1438.4 |
1756.12 |
XAU/USD - Daily Trade Sentiment
Gold prices continue to consolidate within a wide trading range of 1,598 to 1,587. It seems like the traders are maintaining a range ahead of the most awaited NFP figures. However, the bullish breakout of this range can extend buying until 1,621, but for this, gold needs to break above the 1,607. Whereas, immediate support stays around 1,593.
USD/CAD - Resistance Become Support Mark
The Canadian dollar gained traction as oil prices rebounded sharply. USD/CAD slid 0.6% to 1.3326. On the other hand, the Markit Canada Manufacturing PMI climbed to 51.8 in February from 50.6 in January.
The Canadian dollar climbed versus its U.S. counterpart, denting its biggest surge since the inception of the year. Traders speculate that global central banks would attempt to mitigate the economic repercussions of the coronavirus break.
Canadian manufacturing activity grew in February at the fastest speed in a year, economic figures displayed, which could provide some reassurance to the Bank of Canada on the outlook for the economy ahead of an interest rate decision on Wednesday.
Alongside, the U.S. crude oil futures gained 4.4% to $46.75 a barrel, halting a six-session losing streak. Brent jumped 4.5% to $51.90 a barrel. Traders expected a meeting of the Organization of the Petroleum Exporting Countries (OPEC), scheduled for later in the week, to result in deepening existing output cuts to stabilize crude prices. A rise in crude oil prices has driven slight support to the commodity currency Loonie.
USD/CAD - Daily Technical Levels
|
Support |
Pivot Point |
Resistance |
|
1.3369 |
1.3417 |
1.3442 |
|
1.3344 |
1.349 |
|
|
1.3271 |
1.3563 |
USD/CAD - Daily Trade Sentiment
The USD/CAD has not changed much since yesterday as the pair continues to consolidate above a 50 EMA support level of 1.3325. This level worked as a horizontal resistance level for USD/CAD in the past and then started working as a support after it got violated. The 1.3325 support level also extended by the 50 EMA, which may encourage bullish bias in the USD/CAD.
Recently, the USD/CAD has closed a bullish engulfing candle above 50 EMA, which is suggesting odds of buying in the USD/CAD pair. Violation of 1.3328 support can extend sell-off until the next support level of 1.3275. On the higher side, the resistance is likely to prevail at 1.3435. Let's stay bullish over 1.3325 today.
AUD/USD – Lowers Low Pattern In-Play
The AUD/USD bounced 0.5% to 0.6540. The AUD/USD advanced to 0.6555. This morning, the Reserve Bank of Australia lowered its benchmark rate to 0.50% from 0.75%, compared to split expectations for a rate cut.
The central bank said, "the global fury of the coronavirus is anticipated to pause progress in Australia towards adequate employment and the inflation target" and "the Board is prepared to ease monetary policy further to support the Australian economy."
The AUD/USD is also trading with a bearish bias due to the dovish monetary policy by the RBA. The Australian central bank cut its benchmark interest rate to a historic low on Tuesday, setting its central bank amongst the pioneers in the world to ease policy to support the economic slowdown from the coronavirus.
This was the fourth rate cut by the Reserve Bank of Australia (RBA) just in less than one year, sending the cash rate to 0.5% amid rising proof that the momentum in the A$2 trillion ($1.30 trillion) economy has hindered.
The weakness in the AUD/USD continues to drive the exchange rate, and most of the weakness is coming from the Coronavirus. In the U.S., the coronavirus-related death toll has grown to six. South Korea reported a total of 4,335 cases (28 deaths), Italy 2,036 cases (52 deaths), and Iran 1,501 cases (66 deaths).
AUD/USD - Technical Levels
|
Support |
Pivot Point |
Resistance |
|
0.6446 |
0.6496 |
0.6558 |
|
0.6384 |
0.6608 |
|
|
0.6272 |
0.672 |
AUD/USD - Daily Trade Sentiment
The AUD/USD is trading at 0.6560, holding right below the descending trendline resistance level of 0.6565. On the lower side, a continuation of a selling bias can extend AUD/USD prices towards the next support area of 0.6520.
Looking at the 4-hour timeframe, the AUD/USD pair has surged over 50 EMA, which is likely to lead the AUD/USD prices towards next resistance areas of 0.6590 and 0.6640. The leading technical indicators such as RSI and Stochastics are holding in the buying zone, increasing chances for a bullish recovery in the Aussie.
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