US stocks at record highs as Liu He talks to Lighthizer and Mnuchin
US stocks ended the day at record highs as the market started to price-in a trade deal between the US and China. The S&P500 ended the day at $3,133 while the Nasdaq rose to $8,632. The S&P500 is up by 25% this year, which is the biggest gain since 2013 while the Nasdaq is up by 30.1%. This is the best performance in six years. China’s Liu He talked with Robert Lighthizer and Steve Mnuchin about “resolving core issues.” They agreed to remain in contact to address concerns. Trump’s national security advisor, Robert O’Brien, said that he expected a deal to be made before the end of the year. However, Trump has cautioned investors that he will only accept a phase one deal that he believes is in the US interest.
The US dollar was relatively unchanged as Jerome Powell delivered a speech in Providence, Rhode Island. In the speech, the chair signalled that interest rates could remain unchanged for a long period. He also said that the Fed was still committed to a 2% inflation rate. A 2% inflation rate is considered to be a sign of sustainable growth. It is also a level that keeps interest rates high enough to allow changes in case of a downturn. He said that he believes that the economy is in a good place and well-positioned. The market will receive the new home sales data for October and Richmond manufacturing data.
The New Zealand dollar soared after the country released upbeat retail sales data for the third quarter. The numbers showed that core retail sales increased by a quarterly rate of 1.8%, which was higher than the previous 0.3%. Headline retail sales rose by 1.6% after rising by 0.2% in the previous quarter. Sales rose by an annualized rate of 4.5%, which was higher than last year’s 2.9%. These numbers show that the Australian economy is doing well, which could give the RBNZ flexibility on rates. The market will receive the RBNZ financial stability report.
The NZD/USD pair rose slightly to a high of 0.6425 as the market received important retail sales data. This price is still between the 0.6395 and 0.6435 channel the pair has been in the past few days. The dots of the Parabolic SAR indicator are below the price. The short and medium-term moving averages are also slightly below the current price. The pair may continue to move high ahead of the stability report later today.
The EUR/USD pair declined yesterday but was unchanged during the Asian session. The pair is trading at 1.1015, which is slightly above yesterday’s low of 1.1000. The pair is trading slightly above the 23.6% Fibonacci Retracement level. The price is between the 14-day and 28-day moving averages. The RSI has started moving higher and is currently at 48. The pair may have a pullback and retest the 50% Fibonacci Retracement level of 1.1050.
The XAU/USD pair continued to decline as traders continued to hope for a trade deal. The pair is trading at 1454.55, which is slightly above yesterday’s low of 1450. The price is below the 14-day and 28-day moving averages while the RSI has remained close to the oversold level. The momentum indicator has remained along the 100 level while the Parabolic SAR is above the price. The pair may continue to decline.