RBA meeting looms as stocks surge overnight

March 3, 2020

Plenty of activity coming up today, while indices bounced back in a big way overnight.

The euro powered away overnight, with the EURUSD coming close to hitting $1.12. The pair began the week at $1.10420 and dipped to a low of $1.10350 early in the day. After remaining steady for a few hours, mid-session trading saw the pair climb, where it peaked at $1.11843 late in the day. It has come off those highs and is now trading at $1.11375. The GBPUSD continues to underwhelm after starting the week at $1.27669. The pound climbed early, hitting highs of $1.28503 mid-session. It fell away from those highs, eventually bottoming-out at $1.27386 late in the day. It has come off those lows and is now trading at $1.27678.

Indices rebounded in a big way overnight, with the Dow leading the charge. The index opened the week at 25,033.39 and fell to a low of 24,860.38 in the opening hour of trade. It piled on the gains, reaching 26,021.48 mid-session before falling back 1,000 points to 25,025.70. However, that wasn’t the end of the twists and turns as the Dow surged late in the day to hit highs of 26,728.90. It is not far off those highs, currently trading at 26,710.00. The Dax was able to post some solid gains overnight, much to the relief of buyers of the German index. It began the week at 11,757.42 and made some impressive gains early, hitting a high of 12,211.31 mid-session. The Dax fell sharply from there however, dropping to lows of 11,618.03 a few hours later. It recovered from that low however, rallying into the close as it settled at 12,050.48. It has opened slightly higher and is now trading at 12,084.47.

The day ahead shapes up as an interesting one, especially on the back of the rallies witnessed overnight. Will the rally continue? Will negative news surrounding the coronavirus undo all those gains? There’s definitely the possibility for more volatility, meaning there’s also opportunities for traders.

Australia’s central bank, the RBA, meets later today and there is an expectation that they will cut interest rates by 25 basis points to 0.5%. This is on the back of lacklustre economic figures of late. This has been further compounded by the coronavirus, which has put a huge dent in exports, tourism and the tertiary education sector, which relies on the thousands of international students to come to Australia to study. It will be vital to ascertain from the meeting what steps they are willing to take, if any, to support the economy while the coronavirus remains a problem.

Other data published today includes:

Japan – Consumer Confidence

Australia – RBA Rate Statement, AIG Construction Index

UK – Construction PMI, Monetary Policy Meeting Minutes

US – IBD/TIPP Economic Optimism, Wards Total Vehicle Sales, FOMC Member Loretta Mester speaks

Europe – European CPI & Core CPI Flash Estimates, European Unemployment Rate and PPI, Italian Monthly Unemployment Rate, Spanish Unemployment Rate, French Government Budget Balance, Swiss GDP


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