Wall Street reaches all-time high on trade optimism
Wall Street reached an all-time high yesterday as markets grew optimistic about corporate earnings and trade talks. Over the weekend, Donald Trump said that China and the US had agreed on trade concessions. He said that the two countries were ahead of schedule on a big trade deal. This was viewed as a positive thing by the markets. In line with these gains, shares across Asia reached a three-month high. In Japan, Topix rose by 1% while Hang Seng rose by 0.5%. Still, the markets faced a packed schedule, with earnings, Federal Reserve, China PMIs, and US jobs being the main headlines.
The Pound Sterling continued to struggle for direction as markets started to focus on the next phase of Brexit negotiations in Parliament. Yesterday, the European Union agreed to a January 31 extension to Brexit. Meanwhile, Parliament rejected Boris Johnson’s request for a December 12 election. This raises the possibility of more deadlock because of the significant differences between parties. Today, the markets will receive mortgage lending and approvals for September.
Focus will be on corporate earnings as the Federal Reserve starts its monetary policy meeting. Today, key companies to watch will be S&P Global, AutoNation, Mastercard, General Motors, Ecolab, and Mondelez among others. Yesterday, the market received disappointing results from Google. Meanwhile, in the US, the market will receive consumer confidence numbers from Conference Board. Analysts expect confidence to increase from 125.1 to 128.0. Pending home sales are expected to have slowed down in October to 0.9% from the previous 1.6%.
EUR/USD was unchanged during the Asian session as markets waited for the Fed’s decision tomorrow. The pair is trading at 1.1095, which is slightly above Friday’s low of 1.1070. On the four-hour chart, the pair is slightly above the 61.8% Fibonacci Retracement level. It is also along the middle line of the Bollinger Bands. Volumes have declined. The pair may remain in this holding pattern ahead of the Fed’s decision tomorrow.
The USD/JPY pair moved up slightly after Japan released Tokyo’s CPI data. Tokyo’s core CPI remained unchanged at 0.5%. The pair is trading at 108.97. This price is between the middle and upper lines of the Bollinger Bands. It is also a few pips above the important resistance level of 108.93. On the hourly chart, the RSI remains slightly below the overbought level of 70. Like with the EUR/USD, the pair may remain at the current levels ahead of the Fed rates decision.
USD/CAD continued the downward momentum started on October 10, when the pair was trading at 1.3345. Today, it reached a low of 1.3050, which was the lowest level since July 22. The market has been optimistic about the Canadian economy, which has continued to produce better-than-expected data. On the four-hour chart, the pair is trading below the 14-day and 28-day moving averages. The RSI has remained slightly above the oversold level of 30. The pair may continue moving lower.