MARKET CHEERS AFTER SUCCESSFUL CHINA-US SUMMIT IN ARGENTINA
The price of crude oil jumped today after the G20 meetings in which the US and China agreed to halt further trade escalations. The US agreed not to go ahead with the planned tariffs increase in January. Originally, the country was to increase tariffs by more than 15% after the previous 10% increase. China, on the other hand, agreed to lower tariffs on American-made autos and increase spending on America’s agricultural products. The two countries agreed to restart the stalled trade talks. In addition, Saudi Arabia and Russia agreed on the need for oil producers to reduce production to prevent oversupply. In Canada, Alberta, home to the country’s oil sands, announced that it would start reducing the amount of supply in January.
It was a sea of green in the world’s stocks market as investors reacted to the outcome of the G20 meeting. In Asia, China’s A50 index, Shanghai Composite and Nikkei jumped by 290, 67 and 23 points respectively. In Europe, the DAX, CAC, and Stoxx gained by 244, 52 and 46 points respectively. In the US, markets are pointing to a higher open, with the S&P and the Dow expected to gain by 470 and 43 points respectively. This increase was also seen in the metals market, with palladium, silver, and platinum gaining by more than 1%.
The Canadian dollar declined sharply against the USD. This was after Friday’s GDP data. The numbers showed that the country’s economy rose by 2.1% in the third quarter. This was lower than the previously released 2.4%. The MoM economic number showed a contraction of minus 0.1% in September, which was lower than the expected gain of 0.1%. This week, the Bank of Canada will hold its final meeting of the year. Traders will want to hear about the rates guidance for the coming year.
Today, Australia released mixed data. The building approvals, business inventories, and company gross operating profits missed estimates. This was offset by a better-than-expected performance in the construction work done. In China, the Caixin Manufacturing PMI of 50.2 was better than the expected 50.1. Similarly, in Japan, the manufacturing PMI for November of 52.2 was better than the expected 51.8. In Europe, the manufacturing PMI in Spain, the United Kingdom, Germany, and France beat analysts’ consensus estimates. Later today, ISM will release the manufacturing PMI for the USA.
The EUR/USD pair was little moved today after the mixed economic data from the European Union and ahead of the Fed chair testimony to congress later this week. The pair is currently trading at 1.1328, which is within the range it was a week ago. This price is along the 15-day and 30-day EMA. The RSI is currently neutral along the 44 level. The same is the case with the momentum and MACD indicators. This could be the ‘calm before the storm’ before the pair starts a rally in either direction.
The price of palladium crossed the $1200 level as metals rallied. The metal is now $30 below that of gold. A move above gold will be historic for a metal used as a catalytic converter in gasoline cars. Since August, the metal has gained by more than 40%, making it the best-performing metal. The current price of 1190 is above the 50-day and 100-day EMA. The RSI is currently at 63 while the MACD is showing signs of a continuation of the trend. There is therefore a likelihood that the pair will continue moving up.
In the past few months, the USD/CAD has been moving in an upward direction. The pair has made a near-perfect channel as shown below. After the disappointing GDP numbers, the pair moved below the important support level of 1.3237. Today, the pair continued with the downward trend and reached an intraday low of 1.3160. The current price is below the 50 and 100-day EMA on the four-hour chart below. It is also along the Bollinger Bands indicator, a sign that the downward momentum will continue. Going ahead, traders will pay close attention to the statement of the BOC later this week.