American equities rise on strong M&A activity
American futures are rising as investors reflect on the latest stimulus updates and mergers and acquisition talk. In a statement yesterday, Speaker Nancy Pelosi said that she will not support smaller versions of stimulus as Donald Trump has suggested. Instead, she said that any funding should be part of a bigger package that includes funding to states and cities. The market is also reacting to the latest M&A deals. Yesterday, Morgan Stanley said that it would acquire Eaton Vance in a deal worth more than $7 billion. This transaction comes a few days after the bank closed its TD Ameritrade acquisition. In another deal, AMD is said to be acquiring Xilinx in a deal worth more than $30 billion. This transaction is likely a reaction to Nvidia’s $40 billion of Arm Holdings.
The Japanese yen gained against the US dollar even after weak economic numbers from Japan. According to the country’s statistics office, household spending rose at a month-on-month pace of 1.7% in August. That was lower than the expected increase of 3.2%. The spending fell by 6.9% on a year-on-year basis. Most importantly, the country’s overtime pay dropped by 14%, which was an improvement from July’s decline of ~17%.
The economic calendar will have several important events today. In the morning session, the Office of National Statistics (ONS) will release a series of crucial economic numbers from the UK. They include the latest GDP data, industrial production, manufacturing production, and trade. In Norway, the statistics office will provide the latest inflation data. Meanwhile, in North America, Canada will release the official employment numbers. Analysts expect the unemployment rate will fall to 9.7% while the participation rate will rise to 64.8%. In total, they expect that the economy created more than 156k jobs.
The EUR/USD pair rose during the Asian session as traders reacted to the overall weaker US dollar. It is now trading at 1.1780, which is along the highest level since Wednesday. The price is above the 25-day exponential moving averages and the ascending pink trendline. It is also slightly above the triple exponential moving average (TRIX), which is a sign that bulls are prevailing. Therefore, the price will likely continue rising today as bulls aim for the next resistance at 1.1800.
The GBP/USD pair is up slightly ahead of key economic data from the UK. It is trading at 1.1778, which is slightly above yesterday’s low of 1.1728. On the four-hour chart, the price is above the 25-day exponential moving average. However, the signal and main line of the MACD have started falling. Also, the price is nearing the convergence point of the ascending triangle pattern. Therefore, the price is likely to experience a significant breakout today.
The S&P 500 is in a strong rally as investors reflect on the M&A activity in the United States. The index is trading at $3462, which is the highest it has been since September 4. The price has also moved above the 61.8% Fibonacci retracement level. It is above the 25-day and 15-day exponential moving average while the RSI has moved above the overbought level of 70. Therefore, the index is likely to expect rallying as bulls aim for the next resistance at $3500.