Stocks continue rally despite Trump’s threat for more China tariffs
The US dollar was relatively unmoved as traders received the JOLTS job openings data for April. Data showed that the job openings in April were 7.449 million, which was lower than the expected 7.479 million. It was also lower than the previously released 7.474 million. This data came after the official non-farm payrolls data, which showed that the economy added just 75K jobs in May – a sign that American employers are possibly holding out hiring as the trade war intensifies.
Sterling was unchanged ahead of the employment numbers expected today. Data is expected to show that the unemployment rate remained unchanged at the current 3.8%. The claimant count change is expected to have declined by 22.9K while the average earnings index plus bonus is expected to have declined by 2.9%. This data will come a day after the country released weak GDP data, which showed that the economy contracted by minus 0.4% in April. The manufacturing production declined by an annualized rate of -0.8% while the trade deficit to non-EU members increased to 4.6 billion pounds.
Asian stocks rose today even after Donald Trump’s latest threat to impose a 25% tariff on the remaining $300 billion goods from China. In a phone call with CNBC, the President said that he expected to have a meeting with China’s Xi Jinping in the G20 meeting in Japan. If the meeting will not take place, the President said that a 25% tariff on all American goods from China will go into effect. Trump has been focused on the large trade deficit with China. However, some experts dispute this figure. While the headline deficit figure shows a $100+ billion deficit, American firms do business worth more than $300 billion in China. This is compared to just the $20 billion Chinese firms do in the US.
The EUR/USD pair was little moved today and is currently trading at 1.1310. This is slightly lower than Friday’s close of 1.1347 and yesterday’s low of 1.1290. The price is above the 50-day moving average and along the 25-day EMA. The pair has formed an ascending triangle pattern as shown below. Today, with no major economic data expected from the US and the EU, the pair could remain within this range.
The GBP/USD pair is trading at the 1.2677 level, which is above yesterday’s low of 1.2650. On the hourly chart below, the pair is below the 25-day and 50-day moving averages. The price is also slightly lower than the 61.8% Fibonacci Retracement level. The pair will likely react to employment data from the UK and also the ongoing campaign to succeed Theresa May as the next Prime Minister.
The EUR/GBP pair continued the rally started on May 13, when the pair reached a low of 0.8490. Today, the pair reached a high of 0.8922, which was the highest level since January 21. On the daily chart, the pair is above the 25-day and 50-day moving averages while the RSI has reached above the overbought level of 70. The Bulls Power remains strong. There is a likelihood that the pair will continue moving higher to reach the 0.9000 resistance level.