Sea of green in global stocks after impressive China export data

Global stocks rallied today after China released somewhat respectable trade numbers. In July, the country’s exports increased by 3.3%, which was much better than the consensus estimate of a 2.0% decline. In June, exports had declined by 1.3%. Meanwhile, imports declined by -5.6% in the month. The trade surplus increased to $45 billion in the month. Tomorrow, the country will release the CPI data. Investors expect the headline CPI to remain steady at 2.7%. Meanwhile, the Chinese currency remained above 7, which helped provide stability in the market. In Germany, the DAX increased by 95 points while in the EU, Stoxx increased by 33 points. In China, the Shanghai and the A50 indices increased by 25 and 188 points respectively.

The price of crude oil rose slightly today – and then pared some of the gains after Saudi Arabia called a number of OPEC member countries. The country has been disappointed by the recent decline in price. This is despite the fact that it has continued to cut supplies by a bigger margin than that agreed by OPEC. Yesterday, the price of crude declined sharply after the US released inventories data. In the past one week, the inventories rose by more than 2 million barrels. 

In Japan, the country’s statistics office released the current account data. In June, the adjusted current account increased by Y1.94 trillion. This was higher than the consensus estimate of Y1.76 trillion. In July, bank lending remained unchanged at 2.3%. Tomorrow, the country will release the preliminary GDP data for the second quarter. Meanwhile, in the United States, data showed that initial jobless claims decreased by 209k in the past one week. The continuing jobless claims are at 1.684M.

EUR/USD

The EUR/USD pair declined to an intraday low of 1.1185 after the US released the initial jobless claims data. These numbers showed that the US economy is relatively strong. On the hourly chart, this price is below the 50-day (blue) and 25-day (red) EMAs. The two moving averages appear to be forming a bearish crossover. The RSI dropped and is currently at 38. The pair will likely continue moving lower to test the important yellow support of 1.1165.

AUD/USD

After the sharp decline yesterday, the AUD/USD pair rose today after the impressive export data from China. Australia exports a third of its goods to China. On the four-hour chart, the price is slightly above the 23.6% Fibonacci Retracement level. The price is slightly higher than the 25-day EMA and slightly below the 50-day moving average. The 50-day EMA is close to the 38.2% Fibonacci Retracement level.  Therefore, there is a likelihood that the pair will continue moving higher to test this level. This is also supported by the RSI which has moved higher and is currently at 50.

EUR/GBP

The EUR/GBP pair has been on a sharp rally since May this year. In that period alone, the pair has managed to move up from a low of 0.84900 to the today’s high of 0.9250. This is the highest level since June 2017. On the daily chart below, the RSI is slightly below the overbought level of 70. The price is above all the short, medium, and long-term moving averages. The ADX remains above 40, which is a sign that the rally will likely continue. The next resistance level to watch will be 0.9300.