US stocks staged a late rally yesterday as policymakers prepared to start stimulus measures as covid-19 spreads. The Dow ended the day at 1,167, which was the biggest single-day gain since 2018. Traders believe that the US government will propose stimulus packages to aid the affected industries. In a statement yesterday, Donald Trump said that he would like to support the airline and cruise ship industries. He also proposed a payroll tax holiday until November. However, the challenge is that any proposal that is presented needs to have bipartisan support and most democrats oppose his proposals. Other countries like Japan, South Korea, China, and Italy have offered significant support to their economies as the disease spreads.
The British pound declined during the American session as traders focused on the likelihood of a no-deal Brexit. The European Union and the UK have disagreed on how a future trade relationship between the two sides will look like. Boris Johnson has said that he envisions a Canadian style relationship while the EU has insisted on the UK following EU regulations. Today, we will receive major January data from the UK. We will receive the industrial and manufacturing production, trade balance, construction output, index of services, and GDP data. Rishi Sunak, the Chancellor of the Exchequer will read his first budget.
The price of crude oil continued rallying as traders remain optimistic about government stimulus packages. Still, traders are still cautious because of the likely supply increases. Yesterday, Saudi Arabia said that it would export more than 12 million barrels of oil in April, up from the current 9 million. Russia and other exporting countries will also export more as they battle for market share. The implication is that oil prices will remain low for longer and several leveraged American shale producers will struggle to survive.
EUR/USD
The EUR/USD pair declined to an intraday low of 1.1274, lower than this week’s high of 1.1496. On the four-hour chart, the price is along the 14-day exponential moving average and slightly above the 28-day EMA. The RSI has moved from the overbought level of 77 to the current 57 while the average true range has continued to rise. This price is along the 23.6% Fibonacci Retracement level. The pair may decline to test the 38.2% Fibonacci level at 1.1220.
GBP/USD
The GBP/USD pair declined to an intraday low of 1.2866 ahead of the budget. This price is below the weekly high of 1.3200 and is along the 38.2% Fibonacci Retracement level on the hourly chart. The price is slightly above the lower line of the Envelopes indicator while the RSI has continued moving lower. The pair will likely make some major swings today on Brexit, budget, data, and coronavirus.
XBR/USD
The XBR/USD is attempting to recover the losses made on Monday when the price declined by more than 20%. The pair is trading at 38.82, which is higher than Monday’s low of 31.22. The price has moved slightly above the 14-day and 28-day exponential moving average while the RSI has moved from the oversold low of 6 to the current 51. The pair could see some volatility today as OPEC releases its monthly report and EIA releases its inventory data.
