Sea of green in stocks as traders cheer potential trade deal

Global stocks rose as investors cheered a potential trade deal between the United States and China. This happened as the markets received news that the US was considering removing some goods from tariffs. A report by The Financial Times and Th Wall Street Journal cited people close to the situation. The US will remove some tariffs in exchange for better IP protection in China and more purchases. The Chinese currency also strengthened on the positive news. The onshore-traded renminbi rose to Rmb6.9955, passing the seven thresholds it had reached previously on August 5. The currency had weakened to Rmb 7.1875 as trade relations between the two countries deteriorated.

Activity in the UK private sector struggled in October as companies worried about Brexit. A survey by Markit showed that activity in the manufacturing sector firmed to 50 from the previous 49.7. The slow growth also lifted the composite PMI to 50 from the previous 49.3. The composite PMI includes the manufacturing and construction sector. The manufacturing and construction sector have been lagging as companies take a wait-and-see approach on Brexit. The UK manufacturing sector in the UK has underperformed the average of the rest of the European Union.

The Australian dollar strengthened after the Reserve Bank of Australia (RBA) delivered its interest rates decision. The bank left interest rates unchanged at 0.75% as was expected. In the accompanying statement, Governor Lowe said that the bank expected the economy to continue improving, boosted by the recent rate cuts. The economy has also received a boost from increased government spending. The decision came a day after the country released weak retail sales. Its banking sector is also struggling, with most banks seeing lower profits. 

EUR/USD

The EUR/USD pair declined today as the market reacted to favorable news on trade. The pair reached a low of 1.1115 from an intraday high of 1.1140. The price is below the 14-day and 28-day moving averages. The momentum indicator is slightly below the 100 level. The pair may see some significant movements later today as the US releases its trade numbers for September.

AUD/USD

The AUD/USD pair rose sharply today after the RBA decision. The pair rose from an intraday low of 0.6875 to an intraday high of 0.6927. Today’s high is along an important triple top position. The price is slightly below the upper line of the Bollinger Bands. The histograms and the signal line of the MACD has soared, which is at the highest level since October 31. The pair may decline later after hitting the double bottom pattern.

USD/CHF

The USD/CHF pair rose today as the market reacted to positive data on trade. The pair reached a high of 0.9910, which is higher than the short and medium-term moving averages. The RSI has been on an upward trend and today, it reached the overbought level of 70. The momentum indicator has moved above the 100 level. The price is along the 50% Fibonacci retracement level. The pair may continue to rise as it tries to form another cup and handle pattern.