Amazon stopped the bear's wave!
Yesterday central banks in the EU and UK held their monetary policy meeting and interest rate decisions. In the UK, the central bank's policymaker at Monetary Policy Committee (MPC) decided to end the bond purchases plan by 2023 and increase the interest rate by 25 basis points to 0.50%. It is the first consecutive rate hike in Britain since 2004. However, the interesting point is that four members out of nine MPC members voted to raise interest rates by 50 basis points, reflecting the Bank of England's efforts to curb inflation. Market accepted that as a tightening policy!
And then we had a surprise from Mrs. Lagard and ECB. Even though Central Bank did not change the three major interest rates and not going also to change but in special circumstances, it can change. Anyway, market participants did not accept it and still pricing on a faster rate hike as inflation has exceeded 5%. This hawkish guess increased, especially with European Central Bank President Christine Lagarde's comments in the press conference. While always she used to say we have no plan to increase the rates before 2023, yesterday she did not use this sentence and even mentioned that the Eurozone economy recovering fine and will continue to recover even better, while risks to the inflation outlook are increasing. That comment for many market participants was as a 50bp rate hike signal.
Following the mentioned news and data, the euro increased against its crosses. Euro against sterling lifted more than 1.75% from its yesterday's low, above 0.8420. From the technical point of view, in the short and mid-term timeframes like H1 and H4 EURGBP turned to the bullish trend, however as you can see in the bellow figure, in the Daily chart, it is still moving under trend line. Main Resistance in the EURGBP chart, sits at 0.85.
Euro against USD also increased by more than 1.75% from its yesterday's low, above 1.1460. Unlike the EURGBP chart, in the EURUSD chart, we can see that trend changed to the bullish in the Daily chart as well. The first and main resistance sits at 1.15. Continuing the trend will directly depend on US NFP numbers. The strong employment numbers mean that we have to wait for hawkish policy and a faster rate hike, which is going to lift the USD and put more pressure on stock markets and vice-versa.
In the stock markets, so far today Japan’s Nikkei 225 increased by 0.67% and South Korea’s KOSPI rose 0.74%. And while Chinese markets remain closed for a holiday, Hang Seng Index jumped 2.7%.
Last night in Wall Street US stocks closed lower. However, with great earnings from Amazon US futures started to regain the loss and slowly recover from a historic $251 billion wipeout for Meta Platforms Inc. Amazon could add almost 200 billion in market value should its stocks hold the 14% gain in after-hours trading to Friday’s US close. As you can see in the below chart, despite the last night's fall, still in the mid-term, ND100 is moving in a positive zone above Ichimoku clouds.
