Chinese stocks rise despite ongoing trade war
Chinese stocks rose even as data from China supported the economy’s weakening. Data from the statistics office showed that the GDP slowed in the second quarter to 6.2%. This was in line with expectations. In the first quarter, the economy grew by 6.4%. The quarterly growth was the slowest in more than 27 years and is evidence that the ongoing trade spat with the US is hurting. On a QoQ basis, the economy expanded by 1.6%, which was better than the expected 1.5%. Retail sales increased by a YOY rate of 9.8% while the industrial production rose by 6.3%. Fixed asset investments increased by 5.8% in June.
The price of crude oil was relatively unchanged in early trading as Iran and the United Kingdom initiated diplomacy measures to ease tensions. This happened after a British oil tanker was attacked by Iranian boats at the Strait of Hormuz. The attackers were dispersed by a British warship that was escorting the tanker. Over the weekend, top diplomats of the two countries made calls to demonstrate how both sides wanted to further discuss the crisis. In a tweet, Jeremy Hunt offered to return an Iranian tanker it captured two weeks ago if Iran promised that it won’t go to Syria.
With no major economic data expected today, investors will be focusing on the upcoming earning season, which will start tomorrow when big banks like Citi and JP Morgan release their earnings. Other key economic data investors will focus on are the CPI data from New Zealand, UK employment data, retail sales data from the US, and Italian CPI data, which will be released tomorrow.
The EUR/USD pair was relatively unmoved in early trading. It is now trading at 1.1272, which is slightly below last week’s high of 1.1285 and higher than last week’s low of 1.1192. On the hourly chart below, this price is slightly higher than the middle line of the Bollinger Bands. It is also along the 38.2% Fibonacci Retracement level while the momentum indicator is above the 100 level mark. The pair will likely continue moving higher to test the 50% Fibonacci Retracement level of 1.3000.
The AUD/USD pair moved higher in morning trading after the Chinese economic data was released. The pair reached a high of 0.7035, which is above the 25-day and 50-day moving averages. The pair’s RSI has moved to above the overbought level of 70 while the accumulation/distribution indicator has continued to soar. The pair will likely continue moving higher, to test the important support level of 0.7045.
The XBR/USD pair was little moved as traders follow UK/Iran tensions. The pair is trading at 66.34, which is slightly below Friday’s high of 67.35. On the four-hour chart, this price is slightly above the 50% Fibonacci Retracement level. The price is also along the middle line of the Bollinger Bands. The RSI has moved slightly lower from a high of 78 to the current 57. The pair will likely breakout in either direction depending on the upcoming inventories data from the US.