Global stocks bounce back after US senate passes $484 billion stimulus
The British pound rose today as investors reacted to the inflation data released by the Office of National Statistics (ONS). The data showed that the headline consumer price index was unchanged in March after rising by 0.4% in February. The rate rose by 1.5% on an annualised basis from the previous 1.7%. This decline was mostly because of falling clothing, accessories, and oil prices. The core CPI dropped from the previous 0.6% to 0.1%. It dropped from 1.7% to 1.6% on an annualised basis. Meanwhile, the output PPI declined by 0.2% in March while the input PPI dropped by 3.6%. Analysts were expecting the two to decline by 3.9% and 0.4% respectively.
The euro declined today after Italy and German bond spread widened to the highest point since March. The spread is closely watched because it measures the cost of Italian government bonds. Today, the country’s government bonds rose to more than 2%, which is a sign that investors are worried about the stability of Italy and that of the European Union. Italy is a key concern because it is one of the biggest economies in the European Union. It is also one of the most heavily-indebted nations. As a result, its collapse would lead to bigger shivers than those during the Greece crisis.
Global stocks rallied as investors reacted to a new round of stimulus from the US. This was after the Senate passed a new bill that will provide more than $400 billion to small and medium-sized businesses. This brings the total stimulus from the Federal government to more than $2.6 trillion. Additionally, the Whitehouse and Congress are talking about providing more capital to cushion companies. The Fed has also provided stimulus worth trillions of dollars through its quantitative easing program. Meanwhile, the price of crude oil bounced back after Brent moved to the lowest level in more than three decades.
The XBR/USD pair dropped to a low of 19.25, which is the lowest it has been in more than two decades. The pair then made a slight recovery and is trading at 22.65. The price is between all short, medium, and longer-term moving averages while the RSI has moved from the oversold level of 12 to the current 34. The Average True Range (ATR), which is a good measure that volatility has also been rising. This means that the pair will likely see more volatility as traders process multiple data.
The EUR/USD pair was little changed at around 1.0865. On the hourly chart, the pair has been between the 1.0810 and 1.0892 channels since Friday last week. As a result of this consolidation, the amount of volatility as measured by the Average True Range (ATR) and Bollinger Bands has been falling. This could be a sign of a big breakout in the coming few trading sessions.
The GBP/USD pair rose from yesterday’s low of 1.2246 to an intraday high of 1.2370. The price is now trading along the 23.6% Fibonacci Retracement level while the 28-day and 14-day exponential moving averages have made a bullish crossover. The RSI and the Stochastic oscillator have also been rising. Therefore, the pair may continue rising and possibly test the 38.2% retracement level of 1.2400.