Euro falls as Mario Draghi asks for more fiscal stimulus
The euro declined today as traders reacted to a series of news from the European Union. In Germany, retail sales rose by 3.2% in August. This was lower than the consensus estimates of 3.3%. The unemployment rate remained the same at 5.0% while the unemployment change decline of 10k was better than the expected gain of 5k. In Spain, the final revision of Q2 GDP of 2.0% was lower than the previously-reported 2.4%. On a QoQ basis, the GDP rose by 0.4%, which was lower than the previous 0.5%. Meanwhile, in an interview with the Financial Times, Mario Draghi called on European Union member states to implement more fiscal policies to complement the monetary policy. He said:
I [have] talked about fiscal policy as a necessary complement to monetary policy since 2014. Now the need is more urgent than before. Monetary policy will continue to do its job but the negative side effects as you move forward are more and more visible.
The sterling stabilized slightly after a series of mixed data from the UK. The final reading of the second quarter GDP showed that the economy expanded by an annualized rate of 1.3%. This was slightly higher than the previously-reported 1.2%. On a QoQ basis, data showed that the UK economy remained unchanged at -0.2%. Meanwhile, business investments declined by an annualized rate of -1.4%, which was better than the previous decline of -1.6%. On the negative side, mortgage approvals declined to 65.55k from the previous 67.01k. Mortgage lending declined from GBP 4.52 billion to GBP 3.85 billion.
US futures rose today after the Trump administration said it was not considering delisting Chinese stocks in the USA. The statement was made yesterday by the spokesperson of the Treasury Department. Today, there are more than 150 Chinese companies that are listed in the US. These companies have a combined market cap of more than $1.2 trillion. The measure would be a major disruption to public markets as large-scale US companies are invested in these Chinese companies.
The EUR/USD pair declined to an intraday low of 1.0905. This was the lowest level it has been since Thursday last week. On the hourly chart, the pair is trading along the lower line of the Bollinger Bands. The RSI has moved to the oversold level of 30 while the accumulation/distribution indicator has declined as well. The pair will likely continue moving lower to test the previous low of 1.0900.
The GBP/USD pair moved up slightly today after the mixed economic data from the UK. The pair is now trading at 1.2309, which is a bit higher than the day’s low of 1.2267. On the hourly chart, this price is between the 50% and 61.8% Fibonacci Retracement level. The price is also slightly lower than the middle line of the Bollinger Bands. The momentum indicator has continued to move up. The pair will likely move lower in continuation of the current trend.
The XAU/USD pair declined today as global risks appeared to ease off. The pair reached an intraday low of 1479.56, which was the lowest level since August 14. On the four-hour chart below, the price is trading below the 14-day and 28-day moving averages, which made a bearish crossover last week. The pair’s RSI has moved close to the oversold level of 30. In the short term, the pair will likely continue moving lower.