Technical Analysis: 16 March 2019

About the author:

Violeta Todorova
Author name:
By Violeta Todorova
Job title:
Senior Technical Analyst
Date posted:
16 March 2020, 10:00 AM

Markets

The Reserve Bank of New Zealand and the US Federal Reserve have both made unusual intra-meeting interest rate cuts on Sunday. New Zealand rates dropped from 1% to 0.25% and the Fed cut its benchmark rates by 100 basis points to a range of 0 to 0.25%.

Despite the Central Bank action, NZ shares fell at the open this morning and are currently down 3.4%. European and US stock rebounded on Friday but European equities lost ground toward the end of the session, which has been common recently, and it speaks to a nervousness in the market.

After a strong rebound on Friday, US stock index futures are sliding on Sunday, and have dropped by their 5% limit this morning triggering a circuit breaker. A strong bounce followed by the market handing back gains indicates an absence of confidence in the rebound.

Given the sharp drops in the futures markets, today the S&P/ASX 200 (XJO) is likely to reverse some of the gains it posted on Friday.

Foreign exchange

The US Dollar Index (DXY) has been trading higher over the past five sessions, putting additional pressure on the EUR/USD, GBP/USD and the AUD/USD.

We note the DXY is close to its key resistance of 99.88 which appears solid and is likely to exert selling pressure on the greenback.

After the Fed cuts the DXY is falling this morning and we favour a short term rebound in the Aussie to 0.6450.

Commodities

The strength of the US Dollar has put pressure on Gold and a double top pattern was completed on the chart of the precious metal last week. The inverse relationship with the US Dollar and Gold has strengthened over the past week.

Copper broke below its key support of US$2.48 last week and further weakness could be seen in the near term. The potential weakness is likely to be moderate as the red metal is oversold and close to a cluster of underlying support.

WTI and Brent Crude rebounded modestly last week, but most of the gains have been given up, which underlies the weak sentiment in the energy market.

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Disclaimer: Analyst may own shares. The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents ("Morgans") do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.

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