Global markets rise on hopes of a China-US trade deal
Global stocks rose today as traders hoped that a trade deal between China and United States will be made. In an interview with CNBC, Larry Kudlow said that the country was headed to a historic deal with China. He also gave the outlook for a deal being very positive. In a statement yesterday, Donald Trump told reporters that a deal was likely to happen. Still, he cautioned that he will be forced to walk away if the terms are not beneficial for the United States. His walkout from the North Korean talks provided further evidence that the president was prepared to walk away without a deal.
The price of crude oil declined slightly even after news from OPEC showed that supply had dropped in February. While most of the supply cuts came from Saudi Arabia, Kuwait, and UAE, more cuts came from Venezuela, which is facing US sanctions. Output from the 14 OPEC members dropped by 560K barrels a day to 30.5 million barrels. In a sign that supply cuts will hold, Saudi Arabian oil minister, Khalid Al-Falih said that the members will put their countries interests ahead of that of the United States. This comes a day after data from the US showed that inventories declined sharply in the past week.
The EUR/USD pair was little moved today as traders focused on key economic data from the United States and Europe. In Germany, the unemployment change declined by 21K, which was better than the expected 5K drop. The manufacturing PMI was unchanged at 47.6. In Italy, the monthly unemployment rate increased to 105%. For the EU members, the unemployment rate declined slightly to 7.8% while the consumer prices increased slightly to 1.5%. In the United States, personal incomes fell by 0.1% in January while personal spending also declined by 0.5%.
Other notable data today came from Canada, which released the GDP numbers. On a YoY basis, the GDP expanded by 1.7%, which was better than the expected 1.4%. On a MoM basis, the economy contracted by -0.1%. In the United Kingdom, the manufacturing PMI remained unchanged at 52 while the mortgage approvals increased. In China, the manufacturing PMI increased to 49.9 while Japan’s unemployment rate rose to 2.5%.
The EUR/USD pair was little moved today as traders received important data from the US and EU. The pair is now trading at 1.1382, which is slightly higher than the day’s low of 1.1350. On the four-hour chart, this price is slightly above the 21-day and 42-day moving averages. The pair’s Average True Range, which is a measure of volatility has remained subdued while the RSI is between the two levels of 30 and 40. There is a likelihood that the pair will continue moving higher to the 61.8% Fibonacci Retracement levels of 1.1450.
The GBP/USD pair paused the upward climb today as traders continued to focus on Brexit and the key data released by the UK. The pair is now trading at 1.3257, which is slightly lower than the week’s high of 1.3355. On the daily chart, this price is above all the short and medium-term moving averages. This is because the pair is close to the highest level since September last year. With the RSI being slightly below 70, there is a likelihood that the pair will see a slight downward movement in the next few days.
The price of Brent crude moved slightly lower today even after the bullish data from OPEC. The price reached an intraday low of $65.8. On the four-hour chart, this price is along the 21-day moving average. It is however higher than the 100-day moving average while the Average True Range (ATR) indicator has moved further lower. The XBR/USD pair is likely to continue moving higher although this could change during the weekend.