Bank of Japan Governor Haruhiko Kuroda said on Tuesday that the ultra-low interest rates created by the central bank under his rule makes fiscal spending more powerful. There is a global debate on whether governments need to step in to do more to support their economies instead of relying on central bank adjustments.
Kuroda explained that the BOJ was not considering to add to its stimulus in tandem with a form of government spending package. However he accepted that a policy mix was more effective reviving the economy.
“If fiscal policy becomes more aggressive with interest rates at appropriately low levels and continued easing in place under the current yield curve control policy in an overall policy mix, fiscal policy will be more effective,” Kuroda said.
Iran on Monday ignored another part of the 2015 nuclear deal by doubling the number of advanced atomic centrifuges it operates. The advanced centrifuges can in one year help Tehran have enough material for building a nuclear weapon - if it wants. The decision follows US President Donald Trump’s withdrawal from the agreement more than a year ago.
The United States issued on Monday new sanctions on nine people close to Iran’s supreme religious leader Ayatollah Ali Khamenei, including one of his sons.
“Our action is specifically focused on further targeting the financial assets of the supreme leader’s inner circle of both military and foreign affairs advisors,” a Trump administration official told Reuters.
The People’s Bank of China (PBOC) slashed on Tuesday the interest rate on its one-year medium-term lending facility (MLF) loans by 5 basis points to 3.25% for the first time in over three years, as monetary policymakers and politicians in the world’s second-largest economy prepare measures to counter the effects of a slowing economy and ongoing trade war with the US.
China’s President Xi Jinping said on Tuesday that global trade barriers had to be removed, and nations should uphold basic multilateral trade principles and practices while opposing protectionism. Xi was speaking at the opening of the China International Import Expo that started Tuesday to increase foreign investment in China and Chinese assets. Xi’s remarks came amid strong signals by the US that the two economies were close to finalizing a so-called Phase-1 trade agreement.
The common european currency was much pressured by a rather strong US dollar on Monday. The pair price suffered losses as the new President of the European Central Bank (ECB) Christine Lagarde officially began her tenure. However the losses are now in the process of recovery as investors await a batch of American data, including Composite PMI and Fed’s red book during the day. The pair price’s return is currently on the verge of testing 1.1140 at 61.8 Fibonacci retracement. If it persists above there, then we will follow 1.1156 at 78.6 Fibonacci and later 1.1170. Still above 1.1200 puts up firm resistance. In another reversal to pricing, 1.1125 at the lower 50 pct Fibonacci retracement and 1.1110 near the lower band of the ascending channel can be watched.
Support: 1.1125 -1.1110
Resistance: 1.1156 -1.1170- 1.1200
Despite the lifting of the pressure stemming from uncertainties surrounding Brexit thanks to the Parliament’s decision to hold early elections next month, the British pound is still struggling to go upwards. The main reason for that on the first trading day of the week was strong dollar that was backed by formidable US data. However, the pressure on the pair price is easing again. With that, the price might hit 1.2930 if it stay above 1.2900. Still above, we will watch 1.2970 and 1.3000 levels for resistance. In a downturn in pricing, 1.2850 and then 1.2830 should be followed. Still below, 1.2800 will be important.
Support: 1.2850 -1.2830 -1.2800
Resistance: 1.2930-1.2970 -1.3000
Similar to its peers, the Japanese Yen also found itself under pressure from a strong US dollar. However, there has been no reversal for this pair’s price as the yen continues to lose in a move that is perfectly covering all the losses incurred late last week. With the price in a gradual and sure path of rising, it may hit 109.00 level, if it stay above the tested 78.6 Fibonacci. Still above 109.30, a recent top, and 109.50 can be targeted in the medium-term this week. However, a fall from the near-oversold-area means the price going down to 108.60 at the 61.8 level and 108.50.
Resistance: 109.00 -109.30–109.50
Precious metal prices feel the downtrend mood induced by the hopes for a trade deal that Chinese President Xi Jinping and US President Donald Trump can sign later this month. China said the two leaders have been in continuous touch through “various means.” But remembering the previous episodes in the trade war saga, investors are cautious and hold up gold prices above the psychologically important 1500 level. If that line is broken, we can follow 1497 and then 1492 lines for support. In the less likely event of a shift in geopolitical developments, 1510 and then 1514 must be watched.
Support: 1500-1497 -1492
Resistance: 1510 -1514
Oil prices still enjoy the earlier ride after positive US economic data and increasing signals for a Sino-US trade deal. Investors await US inventory data later on Tuesday as the brent price reaches up, once again for 71.00. Fresh US sanctions on Iran and Tehran’s decision to increase the number of its atomic centrifuges have done little in terms of pricing, but long-term repercussions or short-term unexpected flare-up in tensions must keep the market weary. If the price persists above the said level, 71.30 and then 71.50 must be followed. In a reverse, 70.50 and 70.20, the latter at the upper band of the falling channel must be watched.
Support: 70.50 -70.20–70.00
Resistance: 71.00-71.30 -71.50
Optimism earlier that made the German index jump up above the 13 000 line has now left its place to steadying above there. Markets around the world rallied over a potential Sino-US deal but they are now cautious as more details are sought for. In technical terms, the moody investors might push the Dax a little bit lower, towards 13 100 and then 13 050. Further below 13 000 should provide solid support. In the event of a rise, then 13 200 and 13 250 must be watched.
Support: 13 100 -13 050-13 000
Resistance: 13 200- 13 250
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