Australian Stocks Rise Defying the Challenging Banking Sector 11/11/19

Australian Stocks Rise Defying the Challenging Banking Sector 11/11/19

Australian stocks rose even as the banking sector continued to face the biggest challenge in decades. Over the past few weeks, financial results from the country’s banks have been weak. The big four banks – ANZ, Westpac, Commonwealth Bank of Australia and National Australia Bank – hold assets worth more than $960 billion. This is 140% more than Australia’s GDP. These banks are reacting to a report that was released in February. The report expressed greed, dishonesty, and misconduct among these institutions. As a result, they have suffered significant losses as the banking regulator increases lending standards and raised capital requirements.

Australia Stocks Soar as Banking Sector Deteriorates

The AUS200 index rose to a high of $6775. This was the highest level since October 29. The index has been soaring this month after ending the month at $6630. On the hourly chart, this price is slightly below the upper line of the Bollinger Bands. The RSI has moved slightly upwards to 63 while the signal line of the MACD has been rising. The index will likely respond to a Trump speech tomorrow at the Economic Club of New York.

Euro Falls as EU Trims Guidance

The euro has been on a downward trend this week as traders reflect on the health of the region’s economy. These fears became real yesterday when the European Commission lowered the growth forecast for the region. The commission blamed the ongoing trade wars between China and the US and between Japan and South Korea. It also blamed the ongoing uncertainty about Brexit. The commission expects GDP of the 19 member states to grow by 1.1% in 2019. This was lower than July’s forecast of 1.2%. The region will grow by 1.2% in 2020 and 2021.

EUR/USD Technical Analysis

The EUR/USD pair has declined sharply this week. The pair has dropped from a high of 1.1175 to a low of 1.1035. On the four-hour chart, the pair is trading between the 61.8% and 50% Fibonacci Retracement levels. This price is below the 14-day EMA and 28-day EMA. The RSI is slightly above the oversold level of 30. The momentum indicator has risen to almost 100. The pair may continue to decline today as the market receives trade data from Germany.

Sterling Stabilises Ahead of GDP Data

The pound strengthened against the euro during the Asian session ahead of key economic data from the UK. This data will help the market understand the state of the economy. Data from the ONS is expected to show that the economy rose by 1.1% in the third quarter. This will be slightly lower than the second quarter’s growth of 1.3%. On a QoQ basis, the economy is likely to rise by 0.4%. The industrial production is expected to have declined by -1.3% in September while the manufacturing production is expected to have declined by -1.6%. These numbers come as the political environment is set to be heated ahead of the upcoming general election.

EUR/GBP Technical Analysis

The EUR/GBP pair declined sharply and then pared some of those losses in the Asian session. The pair reached a low of 0.8603. On the hourly chart, the price is along the middle line of the Bollinger Bands while the signal line of the MACD has remained being unchanged. The On-Balance Volume has remained being unchanged. The pair may see some significant movements as the UK releases important economic data.


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