Global stocks bounce back as trade tensions ease
Asia-Pacific stocks rose today as the market attempted to play-down risks of a trade war. In Hong Kong, the Hang Seng index rose by 50 basis points while in Australia, the ASX rose by more than 1.50%. Chinese and Japanese stock markets were closed today for holidays. Meanwhile, European futures were mixed, with the DAX index rising by 0.50% while CAC 40 dropped by more than 2.40%. In the United States, futures tied to the Dow Jones and S&P500 rose by more than 0.70%. Yesterday, the market was worried about the return of US-China trade conflicts. This was after the US accused China of being responsible for the coronavirus pandemic.
The British pound rose slightly against the USD ahead of the important services and construction PMI data. The numbers are expected to show that services PMI declined to 12.2 in April while construction PMI improved to 44.0 from the previous 39.3. In total, the composite PMI is expected to decline from the previous 36.0 to a record low of 12.9. The services PMI is particularly important for the UK because it represents more than 80% of the GDP. Also, the sector employs millions of people, including those in the hospitality and financial sectors.
The US dollar index eased slightly in overnight trading as the market waited for the non-manufacturing PMI data. Analysts polled by Bloomberg expect the PMI to drop from the previous 52.9 to 36.8, which will be the lowest level on record. The non-manufacturing PMI will come a few days after ISM released the manufacturing PMI, which showed that the sector contracted sharply in April. The ISM will also release the non-manufacturing business activity, prices, and employment. Meanwhile, the commerce department will release the trade numbers for April. While April numbers are expected to be weak, analysts are looking ahead and focusing on the ongoing gradual reopening of the economy.
The EUR/USD pair inched up slightly because of the weaker US dollar. The pair is trading at 1.0915, which is slightly above the 38.2% Fibonacci retracement level. The pair also rose after it found strong support at 1.0895. On the hourly chart, the price is slightly above the 14-day EMA. Still, the pair seems to be in a strong downward trend. As such, there is a possibility that bears will prevail as they attempt to test the 50% retracement at 1.0870.
The XBR/USD pair rose to an intraday high of 28.75, which is the highest it has been since April 21st. The price is slightly above the 25-day and 50-day EMA and is along the 23.6% Fibonacci retracement on the four-hour chart. Also, the RSI has moved nearer to the overbought level of 70. The pair may continue rising as bulls attempt to retest the 38.2% Fibonacci retracement level at 34.37.
The NZD/USD pair rose to an intraday high of 0.6065, which is the highest it has been since Friday. On the hourly chart, the price formed a double bottom at the 61.8% Fibonacci retracement level yesterday. The price is slightly above the 50-day and 25-day EMA while the RSI is close to the overbought level of 70. The pair may continue rising today as bulls attempt to test the 38.2% Fibonacci level at 0.6075.