Global stocks mixed as China increases stimulus

The British pound declined today, even after strong retail sales data from the ONS. In January, the headline retail sales rose by 0.9%. This was higher than the expected increase of 0.7%. The sales rose by an annualized rate of 0.8%. The core retail sales, which exclude volatile products like food and energy, rose by 1.6%. This increase was the fastest rate of growth since March last year. It came a month after the divisive election that happened on December 12. These numbers came a day after the country released upbeat inflation numbers for January. The headline CPI rose by 1.8% while the core CPI rose by 1.6%. The reason the sterling declined is possibly because traders are worried about risks of a no-deal Brexit.

Global stocks were mixed today as worries on coronavirus increased. The disease has infected more than 75,000 and killed more than 2,130 and it’s spreading in South Korea. In response, the government has asked people to remain indoors. This could affect one of the major economies in Asia. At the same time, China offered more stimulus to the economy. The country’s central bank lowered the one-year prime rate from 4.15% to 4.05%. It also dropped the five-year prime rate from 4.80% to 4.75%. It lowered the funds it lends to financial institutions from 3.25% to 3.15%. In China, the A50 index rose by 55 points. In Australia, the ASX rose by 20 points. In Europe, Stoxx and CAC declined by 15 and 16 points respectively. S&P 500 and Nasdaq futures declined by 7 and 24 points respectively. The biggest news today was that Morgan Stanley agreed to acquire E*Trade in a $13 billion deal.

The Australian dollar declined after the country reported mixed employment data. On the negative side, the country’s unemployment rate rose from 5.1% to 5.3%. This is the highest it has been since October last year. In January, the economy added 20k full-time and part-time jobs. In the past twelve months, the economy has added more than 257k jobs, which is in line with the average annual growth over the past 20 years. The underemployment rate remained steady at 8.5% while underutilization ratio remained at 13.7%. Meanwhile, wages rose by 1.5% in the past six months and by 3.2% in the past 12 months. According to the Bureau of Statistics, the 3.2% growth equates to about $52 per week, up from $39 in the same period last year. 

EUR/USD

The EUR/USD pair was little moved today. The pair has been consolidating in the past few days. It is trading at 1.0790, which is close to yesterday’s low of 1.0777. On the 30-hour chart, the price is above the green resistance level shown below. The pair is also forming a descending triangle pattern. It is also slightly below the 14-day and 28-day exponential moving averages. The descending triangle pattern implies that the pair may breakout lower if it tests the support of 1.0777.

GBP/USD

The GBP/USD pair declined to an intraday low of 1.2850. This is the lowest level since November 26. The price is below the 14-day and 28-day EMA. The RSI has declined to the oversold level of 23 while the signal and main line of the RVI has continued to decline. The pair may continue declining as tensions on Brexit rise.

AUD/USD

The AUD/USD declined to an intraday low of 0.6620. This is the lowest it has been since 2009. The price is below all moving averages while the momentum indicator has been falling. The price is below the dots of the Parabolic SAR on the four-hour chart. The downward pressure is likely to continue during the American session.