Global stocks muted as China slashes tariffs on imported goods
Global stocks were muted to start a shortened week. In Asia, China A50 declined by 173 points while the Hang Seng rose by 35 points. In Europe, the DAX lost 7 points while Stoxx was unchanged. In the United States, futures tied to the Dow Jones Industrial Average and S&P rose by 60 and 7 points respectively. This was in reaction to positive news from China. The country’s cabinet office approved plans to slash import tariffs for all trading partners on more than 850 types of goods. This is part of the first phase of the trade deal that was announced a week ago.
The sterling declined sharply today as the market continued to worry about the likelihood of a no-deal Brexit. The enthusiasm that met Boris Johnson’s win almost two weeks ago appears to have faded. This led to a 60-basis point of the currency against the USD. On Friday, the new members of parliament delivered their first votes. They supported Boris Johnson, whose bill said that he would not seek an extension on December 31. This means that the country will likely see a no-deal Brexit unless another bill seeking an extension is passed.
The US dollar gained slightly against the euro after the Census Bureau released the durable goods order data. The number showed that the core durable goods orders were unchanged in November. This was lower than the expected increase of 0.1%. They rose by 0.3% in October. The headline durable goods orders declined by -2.0%. This was much lower than the consensus estimates of a 1.5% gain. These goods orders will likely be affected by Boeing’s decision to halt the production of its popular 737 max jets.
The GBP/USD pair declined sharply as traders reacted to changes in the British parliament. The pair reached a low of 1.2910, which is the lowest level since December 3. The price is along the lower line of the Bollinger Bands on the four-hour chart. The RSI has been moving lower and is currently at the oversold level of 26. The average true range has stalled as well. The pair may continue to decline to test the important support of 1.2800.
The XAU/USD pair pared earlier gains and declined to a low of 1480.40. The earlier gains were in response to the US decision to sanction the Nordstream 2 project. The price is slightly above the middle line of Bollinger Bands while the RSI has moved from a high of 78 to a low of 55. The average true range has been unmoved, which is a sign of low volatility. The pair may resume the upward trend to retest the important high of 1485.
The EUR/USD pair dropped slightly after the US Census Bureau released the durable goods data. The pair reached a low of 1.1070. This was slightly lower than the intraday high of 1.1088 and slightly above Friday’s low of 1.1065. The pair has been declining after it hit a high of 1.1200 on December 13. The price is below the 14-day and 28-day moving averages. The price may continue to decline to test the important low of 1.1060.