Global stocks fall ahead of fresh China-US trade talks
Global stocks declined today as investors focused on the ongoing trade talks between the United States and China. The two countries are negotiating on a deal that will improve trade ties between the two countries. This week, China’s vice premier, Liu He will travel back to Washington, where he will hold talks with Robert Lighthizer, Steve Mnuchin, Larry Kudlow, and Peter Navaro. Apart from China, investors are concerned about trade between the United States and Europe. Late last week, the president received a report from the commerce department. While the details are not yet known, investors are concerned that the president will place tariffs on European autos.
In the United Kingdom, focus remained on Brexit issues as pressure mounted on the Labor leader, Jeremy Corbyn and Theresa May. Yesterday, a group of the opposition party resigned from the party in protest of Jeremy Corbyn’s leadership. The issues escalated today after Japanese auto manufacturer, Honda announced that it would leave the UK. This decision will lead to more than 3,500 job losses. Traders also received employment numbers, with the employment change increasing by 167K. This was better than the expected 152K. On the negative side, the claimant count increased by 14.2K, which was worse than the consensus estimates of 12.3K. The average earnings index (plus bonus) increased by 3.4%, which was worse than the expected 3.5%.
The Australian dollar declined today after the RBA released the minutes of the February meeting. The minutes showed that officials are getting concerned over the health of the economy. In recent months, the economy faced a number of challenges including falling house prices in Sydney and Melbourne, a prolonged drought and low inflation rate. The latter has been caused by the low oil prices and increased competition in the retail sector. Meanwhile, in the European Union, the February’s ZEW economic sentiment number was at -16.6, which was better than the expected -18.2. In Germany, the number was at -13.4, which was better than the expected -14.1.
The GBP/USD pair rose as divisions in the Labour party raised chances of avoiding a no-deal Brexit. The pair reached a high of 1.2935, which was the highest level since yesterday. The pair seems to be heading towards the 50% Fibonacci Retracement level of 1.2970. This level is above the 21-day and 42-day EMAs. The signal line of the MACD has also started moving up. There is a likelihood that the pair will continue moving upwards, with the key levels to watch being 1.2970 and 1.3000.
The EUR/USD pair declined today to a low of 1.1275. The price is below the 21-day and 42-day EMAs. In the past two days, the pair has been a bit volatile as evidenced by the Average True Range (ATR) indicator below. The RSI has also been relatively unchanged at the 40s level. The pair will probably move downwards as Trump edges closer to a decision on European tariffs.
The AUD/USD pair declined today after the release of the RBA minutes. The pair reached an intraday low of 0.7100, where it found some resistance. On the hourly chart, this price is slightly below the 42-day and 21-day EMAs. The price is also below a narrow channel that has been there since early this month. There is a likelihood that the pair will resume the downward trend and possibly test the 0.7050 support.