EU equities fall on the risk of second wave outbreak
European stocks declined as investors continued to worry about the second wave of the virus. According to health officials, the number of cases in Germany has jumped especially on the northern side of the country. Worse, the “R” factor has started to rise, which means that more people are now vulnerable. The number of cases has also jumped in the United States, China, and Brazil. For example, in the US, nearly 50% of all states are reporting a sharp increase in cases. For example, in California, the number of people hospitalized with the virus rose to 3,574, the highest number on record.
The price of crude oil rose slightly as investors remained concerned about a possible second wave. They fear that the new wave will see states and countries renew lockdowns that were put in place in March and April. This will in turn lead to more concerns about demand. These concerns outweighed the positive data released by Baker Hughes on Friday. The data showed that oil rigs decreased sharply in the United States, Canada, and around the world. For example, the number of rigs in the US has fallen to just 189, which is a significant reduction from January’s high of more than 600. Investors are also worried that rising prices will incentivize more companies to restart their rigs.
The New Zealand dollar rose today ahead of the RBNZ interest rate decision. Analysts believe that the bank will leave interest rates unchanged at 0.25% and the cap of quantitative easing at NZ$60 billion. Still, analysts will be watching out for a statement on negative rates, which the bank has been hinting at for a while. The decision will come a month after the country declared victory over the pandemic. Also, recent economic numbers have been relatively strong. For example, credit card spending declined by 21.1% in May, after falling by 49.1% in the previous month.
The EUR/USD pair is trading at an important level of 1.1210. On the four-hour chart, the price is between 38.2% and 23.6% Fibonacci retracement level. It is also slightly below the 50-day and 100-day exponential moving averages. Also, the histogram and the signal line of the MACD are below the neutral line. This means that even with today’s bounce, the pair may continue falling as bears attempt to test the 38.2% retracement at 1.1150.
The XBR/USD pair is trading at 42.00, which is slightly below Friday’s high of 42.85. On the four-hour chart, the price is above the 50-day and 100-day exponential moving averages. It is also above the ascending white trendline. The RSI is also slightly below the overbought level. Still, the outlook of the pair is bullish so long as the price remains above the 100-day and 50-day EMAs.
The NZD/USD pair is trading at 0.6462 level, which is slightly above the intraday low of 0.6378. On the daily chart, the price has formed a bullish pennant pattern as well as a falling wedge. It is also above the 50-day and 100-day exponential moving averages while the signal and histogram of the MACD is above the neutral line. The pennant and wedge patterns mean that the price may continue rising as bulls aim for the previous high at 0.6576.