European stocks rise as Chrysler and PSA agree to merge
The euro declined today even as the market received positive data from the European Union. In Germany, business expectations rose from 92.3 to 93.8 while the current assessment rose from 98.0 to 98.8. The business climate index rose from 95.1 to 96.3. These numbers show that sentiment in corporate Germany has started to improve. Data from the European Union showed that consumer prices rose slightly in November. The headline CPI rose by 1.3% after rising by 1.1% in November. The core CPI rose by 1.3% after rising by 1.1% in the previous month. Meanwhile, in Europe, the markets cheered a mega merger between Fiat Chrysler and PSA, the owner of Peugeot. The new deal will create a company with combined annual revenues of more than EUR 170 billion. It will be the fourth largest carmaker in the world.
The sterling declined slightly as the markets continued to worry about the likelihood of a no deal Brexit. The declines today brought the total losses to 3.3% after it soared to a 19-month high on Friday. This is after Boris Johnson announced that he would push legislation that will prohibit him from extending the transition period. The market also reacted to the CPI data released by the Office of National Statistics (ONS). The headline CPI remained unchanged at an annualized rate of 1.5% while the core CPI remained unchanged at 1.7%. On an MoM basis, the headline CPI increased by 0.2% after falling by -0.2% in the previous month. The retail price index rose by 2.2% in November after rising by 2.1% in the previous month.
The price of crude oil declined today as the markets reacted to the inventory report by the American Petroleum Institute (API). The report showed that inventories increased by more than 4.7 million barrels. This was higher than last week’s increase of 1.41 million barrels. The market will receive the official report by the American Petroleum Institute (API) later today. They expect the data to show that inventories dropped by more than 1.288 million barrels. This data comes a few weeks after OPEC+ members agreed to more oil production cuts until March 2018.
The EUR/USD pair declined to a low of 1.1125. This price was below the important lower line of the symmetrical triangle that had formed a few days ago. The 28-day and 14-day moving averages have made a crossover and the pair has started a new downward trend. There is a possibility that the pair will continue moving lower to test the 61.8% Fibonacci Retracement level of 1.1100.
The XBR/USD pair has been on an upward trend in December. The pair has risen from a low of 60 to a high of 65.45. This was in reaction to the OPEC+ decision to lower production. The pair dropped to a low of 64.78 today. This price is along the 14-day and 28-day moving averages on the hourly chart. The RSI has moved from the overbought level of 72 to the current level of 55. However, this decline happened in a low volume market. This means that the pair may resume an upward trend.
The EUR/GBP pair dropped sharply on Friday when election results showed that Boris Johnson had won the election. The pair reached a low of 0.8275. The pair then started moving upwards, and today, it reached a high of 0.8517. The price is now along the 14-day moving averages and slightly above the 28-day moving averages. The RSI has moved from a high of 83 to the current 60. The pair may remain in the current holding pattern as the market receives the BOE decision tomorrow.