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Daily market commentary: The dollar bounces back


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ActivTrades’ Market Analysts prepared their daily commentary on traditional markets for March 10, 2020. This is not a trading advice. See details below:


FOREX

The dollar bounced back against other major currencies following political statements from the White House that showed a willingness to act, through concerted economic policies, to mitigate the fallout from the coronavirus crisis.

The focus of the markets is very unlikely to divert from the virus’ impact on the public health and economic prospects of several countries, including of course Italy, but also, and crucially, the United States, where some suspect the numbers of infected may be much higher than the figures published so far indicate.

Some of yesterday’s anxiety was driven by the fear of seeing the US finding itself in a situation similar to that already witnessed in China and Italy. The next few days will determine if today’s rebound in the market is to continue, or if it is not more than the proverbial ‘dead cat bounce’.

Ricardo Evangelista – Senior Analyst, ActivTrades

EUROPEAN SHARES

Shares edged higher in Europe this morning pursuing the trend established overnight by Asian equity markets as a wind of relief and optimism blew in investors’ mind following one of the worst sell-offs in decades yesterday. This sudden change in investors’ trading stance stems from renewed confidence in the financial system after President Trump said he will hold a press conference on new “major steps” to boost the economy, possibly including a payroll tax relief, which will be discussed with Congress later today. On the other side of the world, investors also welcomed a second monetary and fiscal package from the Bank of Japan, echoing what is going to be discussed today in Washington.

In addition, good news also came on the OPEC front after Saudi Aramco announced the company will supply customers with 12.3m b/d in April in an attempt to bring more stability to oil markets following the largest price slump in decades yesterday. Investors were also pleased to see the Russian Energy Minister soften his tone by announcing Russian companies may also boost oil output by 300k to 500k b/d while a new OPEC+ meeting will be organized for not later than May or June. This helped investors regain confidence in financial markets and explains today’s gains on almost every benchmark.

The Stoxx-50 Index is trading significantly higher, above 3,000pts, following a solid bullish gap registered at the open. All sectors are in the green and the best performance is unsurprisingly coming from energy shares with Total and ENI today’s top movers. Bull traders strongly defended the 3,000pts level this morning, leading prices above their 21-period moving average and on track towards 3,105pts and 3,250pts, which are respectively the 23.6% and 38.2% Fibonacci retracements.

Stoxx-50 Index chart

Pierre Veyret– Technical analyst, ActivTrades

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Daily market commentary: The dollar bounces back

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