Euro jumps as FT economists warn of slow 2020 growth
The euro rose today against the USD even as traders received a depressing report from the Financial Times. Even though the European Central Bank (ECB) expects the eurozone economy to grow by 1.1% in 2020, a survey of 34 economics from the region showed that growth would dip below 1%. This will be the slowest rate of growth in seven years. A worse outlook for the EU economy will likely add more pressure to Christine Large, the new ECB chair. She has few options, with interest rates at record lows and with the ECB already spending billions to buy assets every month.
The Japanese yen rose by 15 basis points after positive unemployment rate data from the country. The unemployment rate dropped to 2.2% from the previous 2.4%. The flash industrial production data for November declined by -0.9%. This was slightly better than the expected drop of -1.4% and the previous drop of -4.5%. Meanwhile, in Tokyo, Japan’s biggest city, the headline CPI rose by an annualized rate of 0.9% while the core CPI rose by an annualized rate of 0.8%. On the negative side, retail sales dropped by 2.1% in November. This was a better drop than the previous drop of 7.0%. Meanwhile, in China, industrial profit in November rose by 5.40%. These profits have declined by 2.1% from January to November.
Global stocks advanced today as the markets seemed optimistic about the state of the world economy as the year comes to an end. In the United States, futures pointed to a higher open. Futures tied to the Dow and S&P pointed to 60 and 5 points open. In Europe, the DAX and Stoxx 50 indices rose by 30 and 6 points respectively. The rally in global stocks comes at a time when global tensions have eased. The US and China are in talking trade terms while tensions on Brexit have eased a bit.
The EUR/USD pair rallied today and reached a high of 1.1145. This was the highest level since December 19. The price is slightly above the 50% Fibonacci Retracement level. The price is along the upper line of the Bollinger Bands. It is also slightly above the 14-day and 28-day exponential moving averages. The RSI has been moving upwards and has reached a high of 77. There is a possibility that the is pair likely to continue moving upwards.
The USD/JPY pair declined during the Asian session. It then moved sideways during the European session. The pair is trading at 109.50, which is along the 14-day and 28-day moving averages. The RSI has been moving downwards, from a high of 81 to 42. The price is also between the important channel of 109.17 and 109.71. The pair may continue to move sideways ahead of the new year.
The XAU/USD pair rose today, continuing a rally that started in November when the pair traded at 1445.66. The pair rose to a high of 1513, which was the highest level since November 14. The price is above the 14-day and 28-day moving averages. The RSI has moved above the overbought level of 70 while the momentum indicator has continued to move higher. While the pair may continue moving higher, it may find some significant resistance at these levels as shown in the chart below.