European and American stocks rise on trade optimism

European and American stocks rose today as investors continued their focus on trade. In a statement yesterday, Donald Trump said that a deal with China could happen earlier than expected. He said this a few days before the two countries are scheduled to restart talks on how to deal with the crisis. The statement also came a day after democrats announced official impeachment proceedings. These proceedings came after Trump was accused of using another country to influence the election. Yesterday, the administration released the transcript of his call with the Ukrainian president.

The euro declined even after some positive data from Germany. In October, the German consumer climate index rose to 9.9, which was higher than the previous 9.7. From the EU, loans to non-financial corporations increased by 4.3% in August from the previous 3.9%. In the month, the M3 money supply increased by 5.7% from the previous 5.2%. Meanwhile, in Sweden, consumer confidence declined to 90.6 from the previous 93.3 while household lending growth remained at 4.9%. The trade deficit rose to SEK 5.40 billion. This was from a surplus of SEK 7.4 billion.

The US dollar gained slightly after the final reading of the second quarter GDP. In the second quarter, the economy expanded by 2.0% as was reported in September. In the quarter, the GDO price index increased by 2.6%, which was better than the expected 2.4%. The headline PCE prices increased by 2.4%, which was better than the expected 2.3% while the core PCE increased by 1.90%. The trade deficit increased slightly in August from $72.46 billion to $72.83 billion. Meanwhile, in the past week, initial jobless claims increased by 231k from the previous week’s 210k.

EUR/USD

The EUR/USD pair declined to an intraday low of 1.0922, which was the lowest level since September 12. The current downward trend started on September 13 when the pair reached a high of 1.1110. On the hourly chart below, the pair is trading below the 14-day and 28-day moving averages while the RSI has dropped to the oversold level of 30. The ADX has increased to the current level of 41. The pair will likely continue moving lower to a low of 1.0900.

XAU/USD

The price of gold declined sharply yesterday after Trump released the transcript of his call with the Ukrainian president. The pair reached a low of 1500. This was the lowest level since September 20. Today, the pair declined as it tried to retest the yesterday’s low. The pair is trading below the 14-day and 28-day moving averages. It is also slightly above the 38.2% Fibonacci Retracement level. The pair could retest the 1,500 level and possibly drop further.

USD/CHF

The USD/CHF pair rose to an intraday high of 1.9950. This is after reaching an intraday low of 1.9850 yesterday. The current price is along the blue support line shown below. The price is also slightly above the 14-day and 28-day moving averages. The RSI has also moved up from a low of 30 to the current level of 57. The pair will likely continue moving upwards to test the previous high of 0.9980.