American and Asian stocks fall on trade and FOMC decision
American and Asian stocks declined as the market waited for indications on whether the new round of tariffs will go into effect. Donald Trump is expected to announce whether he will add fresh tariffs on Chinese goods by Saturday this week. Indications are that the US President will add these tariffs. While American and Asian negotiators have recently talked about the progress made, the reality is that very little has changed. China continues to insist that the US must remove the current tariffs while the US insists that China must improve business conditions in the country. Therefore, it is possible that the trade war will continue through the coming year. The Dow lost 105 points while China A50 has lost 25 points today.
Sterling was relatively unchanged as the election date nears. The currency is trading near its three-year high. Recent polling data has shown that Boris Johnson will be a clear winner following Thursday’s election. A victory for the Conservatives will mean that final Brexit negotiations are likely to be wrapped up. Brexit has caused a lot of instability in the UK as businesses hold on to their investments. The market will receive the final reading of the Q3 GDP data later today. Data is expected to show that the economy expanded by an annualised rate of 1.2% in the third quarter. On a QoQ basis, the economy is expected to have slowed from 0.3% to -0.2%. The industrial production is expected to have improved slightly from -0.3% to 0.2% while manufacturing production is expected to have declined by -1.4%. The trade deficit is expected to have narrowed from £12.5 billion to £11.65 billion.
The Australian dollar rose slightly after the country released the mid-year economic and fiscal outlook. The country also released the house price index of the third quarter. The index rose by 2.4% in the third quarter, which was higher than the -0.7% contraction in the second quarter. In recent weeks, data from Australia has been sending mixed signals. The unemployment rate rose by 5.3%, which was better than the 5.2% that the market was expecting. Recent data also showed that the manufacturing PMI declined to 49.9 while retail sales have stagnated. In the most recent RBA decision, the central bank left rates unchanged and signalled that rates will be unchanged for a while.
The EUR/USD pair rose slightly to a high of 1.1068. The price is slightly above yesterday’s low of 1.1054. The price is slightly above the 61.8% Fibonacci Retracement level on the hourly chart. The price is along the 14-day and 28-day moving averages while the average true range has declined. The price is along the middle line of the Bollinger Bands. The pair may remain on the current level ahead of the FOMC decision tomorrow.
The GBP/USD pair has remained unchanged at the current level of 1.3150. The price is slightly below the three-year high of 1.3180. The price is along the middle line of the Bollinger Bands on the hourly chart. The volume indicator has been falling while the accumulation/distribution indicator has flattened. This is an indication that sterling could see a pullback ahead or after the election.
The AUD/USD pair rose slightly after Australia released the house price index. The pair reached a high of 0.6837. The price is along the 14-day and 28-day moving averages. The price is also inside the support and resistance channels shown in red below. The pair may see a significant breakout probably after the FOMC decision tomorrow.