Global stocks rally on stimulus and economic recovery hopes
The British pound continued to rally even as the UK released weak economic data. Numbers from Nationwide showed that house prices declined by 1.7% in April. This was the worst decline in house prices since 2009. Other data from the Bank of England showed that mortgage lending declined from the previous £4.78 billion to £0.29 billion. Mortgage approvals declined from 56.14k to 15.86k. These declines were mostly due to a large proportion of people being at home in April to comply with government requirements. Also, the government suspended the housing market during the month. At the same time, the market is pessimistic about the fourth round of Brexit negotiations that started today.
The Australian dollar rose to an intraday high of 0.6870 after the RBA delivered its interest rate decision. In the statement, the bank left the interest rate unchanged at 0.25% and committed to scale its asset purchases in case the economy weakened. The bank did not talk about negative interest rates, which some analysts have called for. In a statement, an analyst at Westpac asked the bank to consider taking the rates negative as other countries like Denmark, Sweden, and Japan have done. Earlier on, data from the statistics office showed that the current account rose to $8.4 billion in the first quarter.
Global indices rose today as the market remained optimistic about economic recovery and government stimulus. In Germany, the DAX index rose by more than 3.65% after the government and Lufthansa reached a bailout agreement. The index also rose because of a proposed fund to incentivize Germans to buy electric vehicles from the manufacturers. In France, the CAC 40 rose by more than 2% even after the government warned about the recovery. Meanwhile, in the US, futures tied to the Dow Jones and S&P500 rose by more than 0.5%.
The AUD/USD pair rose to an intraday high of 0.6855, which was the highest it has been since January 23 this year. The price is above the 61.8% Fibonacci retracement level. It is also above the 100-day and 50-day exponential moving average while the RSI has moved above the overbought level of 70. The pair may continue to rise as bulls attempt to retest the important resistance of 0.7000.
The GBP/USD pair rose to an intraday high of 1.2575, which was the highest it has been since May 1. The price is slightly above the 61.8% retracement level and is above the 50-day and 100-day exponential moving averages. Also, the price is forming a pattern like cup and handle. This means that bulls may continue pushing it up as they try to test the previous high of 1.2645.
The EUR/USD pair rallied to an intraday high of 1.1188, which is the highest it has been since March 17. On the four-hour chart, the price is above the short and medium-term moving averages. Also, the RSI has moved above the overbought level of 70. Therefore, the upward momentum may continue as bulls attempt to retest 1.1250.