Australia Stocks Tank as Markets React to Latest Westpac Crisis 21/11/19

Australian stocks are having one of their worst weeks this year. The AUS200 index has declined from a high of $6835.35 to a low of $6635.25. This decline is as a result of the weakening sentiment on global trade. It is also because of a large scandal that has engulfed the country’s banking sector. Early this month, the country’s large banks reported relatively weak results due to low interest rates, a slowing economy, and investigations. These problems continued yesterday when Westpac Bank reported that it had not followed money laundering and counter-terrorism laws. This led to more than 23 million breaches. The bank, together with other banks, will, therefore, be under increased scrutiny by the country’s officials.

AUS200 Technical Analysis

The AUS200 index declined sharply after the latest banking scandal emerged yesterday. The index dropped to a low of $6635. It is now trading at $6670. On the hourly chart, the pair is trading slightly above the lower line of the Bollinger Bands while the RSI has remained slightly above the oversold level of 30. The Average True Range (ATR) has risen sharply. The index may continue being volatile as the market observes the ongoing China-US standoff and the banking scandal.

Greenback Unmoved on FOMC Minutes

The greenback was relatively unchanged after the Federal Reserve released minutes for the last meeting. These minutes showed that Fed officials were starting to see some political risk emerging. They nonetheless signalled that rates could remain at the current levels as trade risks eased. This was already priced-in by the markets, especially after Jerome Powell’s testimony in Congress. The Fed has slashed rates three times this year, in what it has been calling a “mid-cycle adjustment.” The market will receive the Philadelphia Fed manufacturing index and existing home sales data.

EUR/USD Technical Analysis

The EUR/USD pair was unchanged in the Asian session. The pair is trading at 1.1075, which is slightly lower than yesterday’s high of 1.1090 and above yesterday’s low of 1.1053. The price is above the 61.8% Fibonacci Retracement level. The signal and main line of the Bollinger Bands have remained above the neutral line. The pair may remain at the current level ahead of manufacturing data from the US.

The price of crude oil rose yesterday after the EIA released inventories data for the previous week. The inventories came in at more than 1.379 million, below the 1.5 million that the market was expecting. The XTI/USD pair reached a high of 57.35 but then eased in the Asian session. The pair is trading at 56.80 as the market remains concerned over demand and supply. The International Energy Agency (IEA) has already warned OPEC to expect higher production in 2020. There are also concerns that OPEC member states like Iraq and Nigeria are not following through its agreement to slash production.

XTI/USD Technical Analysis

The XTI/USD pair is trading at 56.80, which is along the 61.8% Fibonacci Retracement level on the hourly chart. This price is above the 21-day and 14-day moving averages while the RSI has been moving lower. The momentum indicator has continued to trade above the 100 level. The pair may remain at the current levels as the market waits for more information on trade.