Sea of red in global stocks as fears over a trade war resume
The euro moved up slightly against the USD after the release of mixed data from the European Union. In Italy, the industrial production contracted by -5.5% in December. This was a weaker contraction than investors were expecting. It was also weaker than the contraction of -2.6% experienced in November. In Germany, exports increased by 1.2% in December, which was higher than the expected 0.2% increase. Imports increased 1.5%, which was higher than the expected 0.2% while the trade surplus increased by 19.4 billion euros. This increase was better than the 18.9 billion euro increase in November. In France, industrial production increased by 0.8% in December, which was better than November’s contraction of -1.5%.
The Japanese yen was little moved today after the release of mixed economic data. Household spending increased by 0.1% in December, which was lower than the consensus estimate of 0.8%. Similarly, the current account came at 0.453 trillion yen, which was lower than the consensus estimate of 0.568 trillion yen. On a positive side, household spending contracted by -0.1%, which was higher than the expected contraction of -0.2%. The adjusted current account for December came at 0.453 trillion yen, which was better than the expected 0.430 trillion yen.
It was a sea of red for global stocks as fears over a trade war came back to the market. It all started yesterday when the US president was asked whether he will meet with Chinese president, Xi Jinping before the March 1 deadline. He responded that he will not meet with the Chinese leader, which was interpreted as a sign that a trade agreement will not be reached. In Europe, the DAX, CAC, and Stoxx declined by 0.50%, 0.20%, and 0.30% respectively. In the Asia-Pacific region, the Nikkei and Australia’s ASX 200 declined by 2% and 0.35% respectively. In the United States, futures pointed to a lower decline with the Dow and Nasdaq expected to decline by 0.55% and 0.80% respectively.
The EUR/USD pair moved up slightly against the USD to an intraday high of 1.1345. This was higher than this week’s low of 1.1312. The current price is still below the 25-day and 50-day EMAs. The money flow index (MFI), which is a volume-based RSI moved upwards to the 40 level from the previous low of 17. There is a likelihood that the pair will resume the downward trend to test the important support of 1.1300.
The price of crude oil dropped sharply yesterday after the revelation that a deal between United States and China will likely not happen. Today, the XTI/USD pair was struggling to find direction as traders assessed the impact of the news on trade. The pair is currently trading at 52.66, which is below the 50-day and 25-day EMAs. The pair’s RSI has been little moved while the MACD remains in the oversold territory. There is a possibility that the pair will move upwards during the American session if Trump clarifies his statement on trade.
The USD/JPY pair was little moved today after the release of mixed economic data from Japan. The pair has been relatively unchanged this month, which is an indication that sharper movements could be coming in the near future. The pair is now trading at the 109.75 level. On the four-hour chart, the pair is trading along the 25-day EMA. It is below the 200-day EMA and below the 100-day EMA, which is a sign of increased consolidation. At this point, the indicators are showing a neutral signal, which is an indication that the pair will move in either direction.