British pound holds steady ahead of UK GDP data
US and Asian stocks rallied after Joe Biden signed the $1.9 trillion stimulus package. The package includes funds for individuals, companies, states and local governments, and unemployment benefits extension. As such, they will help the economy bounce back after going through the worst contraction in modern history. However, the stimulus also risks boosting inflation, which will likely force the Fed to increase interest rates. In the US, the Dow Jones rose by 188 points while the Nasdaq 100 index rose by 329 points. In Asia, the Hang Seng and Nikkei 225 rose by more than 1%.
The British pound rose against the US dollar as investors waited for important GDP data from the UK. The Office of National Statistics (ONS) will publish these numbers at 07:00 GMT. Economists polled by Reuters expect the data to show that the economy rose slightly in the fourth quarter, narrowly avoiding a technical recession. They expect the data to show that manufacturing production declined by 3.6% in January after falling by 2.5% in the previous month. Also, they see industrial production falling by 4.0% because of the lockdowns that were implemented in January.
The Canadian dollar rose slightly against the US dollar ahead of the latest Canadian jobs numbers that will come out in the afternoon session. Economists expect the data to show that the country’s unemployment rate improved from 9.4% in January to 9.2% in the previous month. Also, the participation rate is expected to improve slightly from 64.7 % to 64.9%. Further, analysts expect the numbers to reveal that the Canadian economy added more jobs in February than it did in January. These numbers come a few days after the Bank of Canada published its rate decision.
The EUR/USD pared back some of its gains in the Asian session. It is trading at 1.1961, which is slightly below yesterday’s high of 1.1991. On the hourly chart, the pair has moved from the 38.2% Fibonacci retracement level. It is also along the lower line of the ascending channel that is shown in yellow. The pair is slightly above the 25-day moving average while the MACD is above the neutral line. Therefore, the EUR/USD will likely rebound as traders attempt to retest the upper side of the channel.
The West Texas Intermediate (WTI) price held steady in the Asian session. On the hourly chart, the price is along the 23.6% Fibonacci retracement level. It has formed an ascending wedge pattern and it is also slightly below the 14-day double exponential indicator while the Relative Strength Index (RSI) is slightly below the overbought level. Therefore, the pair may resume the upward trend and then retreat as the wedge pattern reaches its confluence level.
The USD/CHF price declined slightly in the evening session. It is trading at 0.9268, which is slightly below the year-to-date high of 0.9378. On the daily chart, the pair has moved above the 25-day and 50-day day moving average while the Relative Strength Index is slightly below the overbought level. The price is also slightly below the lower side of the Bollinger Bands. Therefore, the pair may still resume the upward trend as bulls attempt to test the next key resistance at 0.9400.