Euro gains after positive economic data
The euro continued its upward trend after signs that the EU economy was doing better than expected. According to Eurostat, the economy rose by 1.2% in the first quarter. This was higher than the 1.1% that traders were expecting. On a quarterly basis, the economy rose by 0.4%, which was better than the expected 0.3%. In March, the unemployment rate declined to 7.7% from the previous 7.8%. In Italy, the GDP rose by an annualized rate of 0.1%, which means that the economy was out of recession. In Germany, the unemployment change of 12K was double the 6K that investors were expecting. On the negative side, the German import price index rose by 1.7%, which was below the expected 2.0% while the import price index was unchanged. In addition, the headline CPI rose by 2%, which was better than the expected 1.6%.
Global stocks were mixed today after the weak PMI data from China. According to Markit, in March, the manufacturing PMI declined to 50.1 from the previous 50.5. The non-manufacturing PMI declined to 54.3 from the previous 54.8. According to Caixin, the manufacturing PMI declined to 50.2 from the previous 51. The reduction in activity in the manufacturing and non-manufacturing sector is a blow to an economy that is in recovery mode.
The Canadian dollar declined slightly after the country’s statistics office released the economic growth numbers. In February, the economy contracted by 0.1%, which was lower than the consensus estimate of 0.1%. This slowdown was driven by weak mining, quarrying, and oil and gas exploration sectors. The same was true with the transportation, finance, and insurance sectors. These losses were offset by utilities, which rose because of the cold weather and the construction sector.
The EUR/USD pair continued the upward trend started on Friday. The pair reached an intraday high of 1.1223, which is slightly above the 50% Fibonacci Retracement level. It is currently trading above the 50-day and 25-day moving averages, while the price is along the upper line of the Bollinger Bands. As a result of strong European data, the pair will likely continue moving higher ahead of the Fed statement tomorrow.
The price of West Texas Intermediate (WTI) rose to an intraday high of 64.70. This is as investors waited for inventory data from the US, which will be released today and tomorrow. Investors believe that the drop that happened on Friday was exaggerated. On the four-hour chart, this price is slightly above the middle line of the Bollinger Bands. The RSI has recovered slightly from the oversold level of below 30 to the current 53. Therefore, there is a likelihood that the XTI/USD pair will continue to move higher, to retest the previous highs.
The Canadian dollar declined to a low of 1.3425 after the release of the Canadian GDP numbers. It then quickly pared some of those gains. On the hourly chart, this price is below the 25-day and 50-day moving averages while the Accumulation/Distribution pair continued to decline. The dots of the Parabolic SAR indicator remained on the upper side of the price. There is a likelihood that the pair will continue moving lower, to test the important support of 1.3400.