Sterling jumps as hopes of a Johnson Brexit deal rise
The euro was relatively unchanged even after more weak economic data from Europe showed that the economy could slide into a recession. Earlier today, the German composite PMI data declined to 48.5 from the previous 51.7. Services PMI declined to 51.4 from the previous 54.8. In the EU, the services PMI data declined to 51.6 from the previous 53.5 while the composite PMI declined to 50.1 from the previous 51.9. These numbers came a day after the Trump administration said it will impose tariffs on over $7 billion worth of goods from the EU. While all these are bad news, traders are betting that EU member states – particularly Germany – will implement a new round of fiscal stimulus.
The Australian dollar rose slightly against the USD after the country released weak economic numbers. In September, the services PMI rose to 52.4, which was slightly lower than the consensus estimates of 52.5. The trade surplus narrowed to $5.92 billion in August. This was lower than the previous $7.25 billion. Economists polled by Reuters were expecting the trade surplus to decline to $6 billion. This decline happened as both exports and imports declined.
The sterling rose as Boris Johnson addressed parliament for the first time after unveiling his Brexit plan. There has been a lukewarm reception to Johnson’s deal. For example, Steve Baker, who leads the European Research Group, which advocates for a hard Brexit said that there was a possibility of his caucus supporting the bill. Other members who rejected Theresa May’s bill have also shown signs of flexibility with Johnson’s bill. However, there are little chances that the deal will be passed by the European parliament. Meanwhile, from the US, initial jobless claims rose by 219k in the past week. The continuing jobless claims increased to 1.651k.
The EUR/USD pair was relatively unchanged today as traders waited for a response from the EU on US tariffs. Traders are also waiting on US jobs numbers, which will be released tomorrow. The pair is trading at 1.0960, which is slightly above the weekly low of 1.0980. The price is currently trading slightly below the upper line of the Bollinger Bands. The RSI has been on an upward trend and is currently trading at 58. The pair will likely move higher in the American session to test the important resistance level of 1.1000.
The GBP/USD pair rose today as hopes of a Brexit deal rose. The pair rose from a low of 1.2265 to the current 1.2275. On the hourly chart, this price is along the 50% Fibonacci Retracement level. The pair is also trading along the upper line of the Bollinger Bands. The RSI has moved closer to the overbought level of 70. The pair will likely continue moving higher as traders wait for more comments on Brexit.
The USD/CHF pair has been on an upward trend since August 12 when the pair was trading at 0.9660. Today, the pair reached a high of 1.0026. On the hourly chart, the pair is trading above the 14-day and 28-day moving averages. The average directional index has eased slightly and is currently at 34. The pair will likely continue moving higher. If it does, the next point to watch will be the parity level of 1.0000.