Global stocks decline as Trump signs Hong Kong support bills

Global stocks declined today as investors worried over President Trump’s decision to sign two bills in support of the Hong Kong protesters. This decision risked the truce of trade between the two countries. The two bills were supported by legislators on both sides of the aisle. This decision was immediately protested by Beijing. The country’s foreign secretary said that the US had seriously interfered with China’s internal affairs. Beijing also summoned the US ambassador to China in protest. In Asia, the Shanghai composite index declined by 14 points while the Nikkei shed 30 points. In Europe, the DAX and Stoxx dropped by 45 and 8 points. In the United States, the Dow and S&P500 futures declined by 72 and 6 points respectively.

The Australian dollar declined after the bureau of statistics released important expenditure data for the third quarter. In the quarter, building capital expenditure rose by a monthly rate of 2.7%. This was better than the second quarter’s decline of 3%. Plant capital expenditure declined by -3.5%, which was lower than the second quarter’s growth of 2%. Private new capital expenditure declined by -0.2% to $29 billion, which was below the expected -0.1%. These numbers show that the Australian economy has not recovered yet. The decision by Trump to sign the bills supporting Hong Kong protesters complicates the issue because it may lead to retaliation that could affect Australia indirectly.

The euro declined against the USD as the markets received a number of key important data. In Spain, preliminary CPI increased by an annualized rate of 0.4%, which was higher than the consensus estimates of 0.2%. In Germany, the headline CPI remained unchanged at 1.1%. In the UK, the nationwide house price index increased by an annualized rate of 0.8%, which was higher than October’s 0.4%. In Sweden, October’s retail sales jumped by 3.3%, which was higher than September’s 2.5%. Meanwhile, survey data showed that the business and consumer surveys increased from 100.8 to 101.3. 

EUR/USD

The EUR/USD pair declined today to a low of 1.1000. The price is slightly below the middle line of the Bollinger Bands. It is also between the 1.0992 and 1.1025 channel on the hourly chart. The volumes indicator is moving downwards. There is a likelihood that the pair will remain along this channel as US markets remain closed tomorrow for Thanksgiving.

GBP/USD

The GBP/USD pair declined sharply today as the market reacted to the decision by Trump to sign the Hong Kong support bills. The pair reached a low of 1.2900, which is along the 50% Fibonacci Retracement level. The dots of the Parabolic SAR have moved above the price, which is a bearish signal. This is being supported by the 14-day and 28-day moving averages, which are close to making a bearish crossover. The pair may decline to test the 38.2% Fibonacci Retracement level of 1.2880.

AUD/USD

The AUD/USD pair declined to an intraday low of 0.6758, which was the lowest level since October 17. The price is below the 14-day and 28-day moving averages while the momentum indicator has remained below 100. The dots of the Parabolic SAR indicator are above the price. There is a likelihood that the price will continue moving downwards.