Global stocks in holding pattern ahead of Powell testimony to congress
Global stocks were relatively unchanged today as investors waited for the Fed chair testimony. Today, Jerome Powell will begin his two-day testimony in Washington where he is expected to answer questions about the health of the US economy. This will be the first time investors will hear from the Fed chair after Friday’s impressive jobs numbers. Later on, investors will receive minutes from the previous FOMC meeting where members pointed to a rate cut in the coming meeting. In Asia, the Shanghai and Nikkei indices declined by 13 and 30 points respectively while in Europe, the DAX and CAC indices declined by 50 and 5 points respectively. In the US, S&P 500 and Dow futures pointed to a 7 and 55-point decline.
The Canadian dollar was relatively unchanged against the USD as investors waited for the BOC to deliver its interest rates decision. The bank is expected to leave rates unchanged at the current level of 1.75%. The officials are also expected to express concerns about the ongoing trade war between the US and China and between South Korea and Japan. The bank is expected to reaffirm that while it won’t hike or cut rates this time, it could be forced to do so depending on the upcoming data.
The GBP/USD pair moved slightly higher after the country released mixed economic data. In May, the GDP expanded by 0.3%, which was better than the previous decline of -0.4%. This growth was attributed to the recovery of the automobile industry. The index of services remained stagnant at 0.3%. in addition, the trade deficit narrowed slightly in May, falling to GBP 11.52 billion. On the other hand, the country’s industrial and manufacturing data disappointed. Industrial production increased by 0.9%, which was lower than the expected increase of 1.1% while manufacturing production increased by 1.4%, lower than the expected 2.2%.
The GBP/USD pair moved slightly higher to 1.2496 after the UK economic data releases. On the four-hour chart, the price is along the 14-day moving averages and is below the 25-day moving averages. The RSI has moved from the oversold level of 30 to the current 35 while the accumulation/distribution indicator has remained being subdued. The pair will likely remain in the current holding pattern ahead of the Fed chair testimony.
The EUR/USD pair moved slightly lower today ahead of the Powell testimony and the FOMC minutes. The pair is now trading at 1.1212, which is slightly higher than yesterday’s low of 1.1192. On the hourly chart, this price is along the short and medium-term moving averages, which is a sign of consolidation. The accumulation/distribution indicator has also remained relatively subdued. There is a likelihood that the pair will remain along the current levels ahead of the testimony and the FOMC minutes.
The USD/CAD pair declined to a low of 1.3098 ahead of the Canadian central bank decision. The pair remains close to the lowest level since January this year. On the four-hour chart, the pair is trading along the short and medium-term exponential moving averages while the RSI has been declining. The pair is slightly below the 23.6% Fibonacci Retracement level. The pair will likely make major moves after the BOC decision.