Euro falls as German economy wobbles
Global stocks were mixed today as the market continues to focus on COVID-19. In the US, futures tied to the Dow and Nasdaq rose by 75 and 55 points respectively. In Europe, the DAX, Stoxx, and CAC declined by 20, 35, and 37 basis points respectively. In Japan, the Nikkei fell by more than 3% as the government warned on growing risks. The government encouraged companies to adopt remote working, staggered shifts, and online meetings to reduce the spread of the disease. This information came a week after Japan released weak GDP and machinery order data. The data came after the country added a new consumption tax that has affected consumer spending. This leaves the country teetering on the edge of a recession.
The euro declined slightly on weak economic data from Germany. Data from the statistics office showed that the economy stagnated in the fourth quarter. The economy wobbled last year. It started on a positive note, then eased in the second quarter, and recovered slightly in the third quarter. As a result, the economy grew by just 0.6% in 2019. This weakness was caused mostly by a slowdown in government and household spending. Companies, particularly those in the industrial sector, also struggled. Manufacturing was in a recession for most of the final half of the year. Meanwhile, the number of employed people rose by 0.3% to 45.5 million. Looking forward, the German economy may be affected by COVID-19 since the country is a well-known exporter.
The British pound rose today as ministers from the EU met to approve post-Brexit talks. The members will approve a document that will serve as a reference point for any future trade deal. At the same time, Boris Johnson ministers met to discuss the government’s opening stance for negotiations. The two sides appear to be at crossroads. The EU has insisted that the UK must operate using its regulations to access the EU market. The UK, on the other hand, has suggested using the Canadian-style trade agreement. The EU-Canadian agreement, formally known as Comprehensive Economic and Trade Agreement (CETA), gets rid of most, but not all, tariffs on goods between the EU and Canada. It has also increased quotas on certain goods. The EU has rejected this proposal, citing the UK geographical location.
The GBP/USD pair rose to an intraday high of 1.2995. This is along the 61.8% Fibonacci Retracement level and above the 14-day and 28-day exponential moving averages on the one-hour chart. The RSI has also been rising. The pair may continue rising as the Brexit negotiations kick-off. If it does, it will likely move above the important support of 1.3000.
The EUR/USD pair moved slightly lower today following the weak economic data from Germany. The pair moved from an intraday high of 1.0865 to a low of 1.0840. The price is along the 14-day and 28-day exponential moving averages on the hourly chart. The pair also seems to have found significant resistance at the 1.0870 level. This is because it has formed a triple top pattern near this level. Although the pair may drop lower, a move above 1.0870 will see it continue rallying.
The USD/JPY pair declined to an intraday low of 110.35 today. The pair has been on a significant decline since Friday last week when it was trading at 112.22. The price is below the short and medium-term moving averages. The RSI has moved from a high of 95 to a low of 13. The price is also below the dots of the Parabolic SAR indicator. The pair may continue moving lower during the American session.