Euro rises after ECB publishes hawkish minutes
Global stocks declined for the fourth straight day as investors continued to worry about trade. Tensions have risen between the US and China as the two sides have taken hard line positions. They have been complicated by the decision of the US congress and senate to pass bills in support of Hong Kong protesters. Today, it was reported that China’s chief negotiator, Liu He, had sent invitations to his American counterparts for a new round of one-on-one talks. Still, investors are sceptical that a deal may not be reached. China has resisted the US proposals of IP and additional farm purchases. The country has also insisted that the US must remove tariffs as part of the first phase of negotiations. At the same time, China has been stepping up efforts to win support from international organizations like WTO, IMF and World Bank that have historically been dominated by Washington.
US futures pointed to a weaker open as markets focused on trade, earnings, and corporate news. This week, the market has received mixed earnings from retailers like TJ Maxx, Home Depot, Target, and Lowe’s. The market also reacted positively to new Boeing orders for its troubled 737-max plane. Yesterday, PayPal announced that it would acquire Honey, a company that helps people save money when shopping online. Today, CNBC reported that Charles Schwab was in talks to acquire TD Ameritrade, which is valued at more than $22 billion. This will be a big deal that will create a behemoth with more than $5 trillion in assets.
The euro rose slightly today after the ECB published the account of the previous monetary policy meeting. The minutes showed that members discussed the impact of its decision to publish the new euro short-term rate, its decision to introduce a two-tier remuneration system for excessive reserves, and the recent volatility in the US repo market. They also talked about the improving consumer spending in the EU. On employment, they expressed concerns about the deceleration of jobs in the manufacturing sector and reduced exports. In the meeting, the committee decided to leave rates unchanged. They also committed to resume net asset purchases worth EUR 20 billion every month.
The EUR/USD pair rose slightly to a high of 1.1095. This was the highest level this week. On the hourly chart, the price is between the 50% and 61.8% Fibonacci Retracement level. The price is also slightly above the 14-day and 28-day moving averages, which made a bullish crossover yesterday. The RSI has moved from a low of 35 to 68. The pair may continue with the upward trend as it tries to test the 1.1100 level.
The XBR/USD pair recovered its Asian-session losses and is now trading at 61.70. This is higher than yesterday’s close of 61.58. The current price is along the 61.8% Fibonacci Retracement level. The price is above the 14-day and 28-day exponential moving averages. The RSI has moved close to the overbought level while the on-balance volume has reached its highest level in months. While the pair may continue moving higher, there is a likelihood of more volatility as the markets watch trade and the upcoming OPEC meeting.
The GBP/USD pair continued the upward trend that was started yesterday when it reached a low of 1.2885. The pair’s price reached a high of 1.2970, which is an important resistance level. The 14-day and 28-day moving averages have continued to move upwards while the price remains above the Ichimoku cloud. The pair may continue to move higher but traders should watch the important resistance of 1.2985 closely.