S&P 500 closes at record high as US dollar plunges
The Japanese yen weakened against the US dollar as investors reacted to mixed trade and machinery order numbers from the country. According to the Cabinet Office, the country’s core machinery orders declined by 22.5% on a year-on-year basis in June. That was worse than May’s decline of 16.3% and the consensus estimates of 17.6%. The orders dropped by 7.6% on a MoM basis against the expected increase of 2.0%. Meanwhile, Japan’s exports in July declined by 19.2% while imports fell by 22.3%. The two had declined by 26.2% and 14.4%, respectively in the previous month. As a result, the trade surplus increased to 11.6 billion yen.
The S&P 500 ended yesterday on a record high, reversing the sharp declines at the height of the coronavirus pandemic. The index rose to an all-time high of $3,395, despite persistent investor unease about the US economy. Analysts cite actions by the Federal Reserve and Washington as the main reasons why stocks have rebounded. For example, the Fed has brought interest rates to record lows and unleashed its biggest quantitative easing program on record. It is also buying corporate bonds, which is supportive for stocks.
The British pound rose slightly as investors remained optimistic about the ongoing Brexit talks. They are hopeful that the two sides will reach an agreement after months of false starts. Later today, the pound will react to inflation data from the UK. Analysts surveyed by Reuters expect that the headline CPI remained unchanged at 0.6% in July while the core CPI declined slightly from 1.4% to 1.3%. Meanwhile, analysts expect that eurozone consumer inflation also remained unchanged at 0.4%. Other important numbers to watch today will be inflation numbers from Canada, EIA crude oil inventory numbers, and the FOMC minutes.
The EUR/USD pair rose to a high of 1.1970, which is the highest it has been in two years. The price moved above this month’s high of 1.1920. The daily chart shows that the pair has been in the green for the past seven days. It is also above all moving averages while the RSI has moved above the overbought level of 70. While the pair is overbought, it is not extremely overbought, which means that the price is likely to continue rising as bulls aim for 1.2000.
The GBP/USD pair rose to an intraday high of 1.3267, the highest it has been since December last year. The pair moved above the ascending triangle pattern. Also, it moved above 76.8% Fibonacci retracement level. The bulls power indicator shows that bulls have been relatively strong in recent days. Therefore, the pair is likely to continue rising as bulls aim for the next resistance at 1.3300.
The Canadian dollar gained against the USD after Justin Trudeau named Chrystia Freeland the new finance minister. The USD/CAD pair reached a multi-month low of 1.3161 during the Asian market. The pair is below the 50-day and 100-day exponential moving averages while the signal line of the MACD is below the neutral level. The pair is likely to continue falling as bears target moving below 1.3100.