Global stocks sink as US coronavirus cases jump
New Zealand dollar declined sharply today after the country’s central bank delivered the rates decision. As most analysts were expecting, the bank left interest rates and quantitative easing policy unchanged at NZ$60 billion. In the statement, the bank applauded the country for eradicating the disease but warned about the recovery path. The risk, according to the bank, is that the closed borders could affect the recovery of the economy. On a positive note, the country’s top trading partners, including Australia and China have almost won the fight against the disease. Another positive is that New Zealand is mostly an agricultural country, which means that demand for its products will remain.
Global stocks declined as investors worried about the rising coronavirus cases in the United States. The country reported more than 30,000 new infections yesterday, the highest number since May. Also, more states, including Arizona, Texas, and Florida have reported more cases. In a statement yesterday, Dr. Anthony Fauci warned that the number of cases could jump sharply in the coming weeks. As a result, the European Union has warned that it will bar American flights because of the rising cases. In a statement, the Trump administration said that it is considering additional tariffs for EU and UK goods worth more than $3.1 billion.
The euro pared earlier losses against the US dollar as traders reacted to the better-than-expected economic numbers from Germany. A report by Ifo, the German institute, showed that business expectations rose to 91.4 in June. This was higher than the previous 80.5 and the consensus estimate of 87.0. Business climate increased from the previous 79.7 to 86.2 while the current assessment improved from the previous 78.9 to 81.3. These numbers came a day after another set of data from Markit showed that manufacturing and services were improving.
The EUR/USD pair is trading at 1.1300, which is higher than the day’s low of 1.1263. On the daily chart, the price is above the 50-day and 100-day exponential moving averages while the signal line of the MACD has made a bearish crossover. If the pair ends the day higher today, it will have formed a three white soldiers pattern, which is usually bullish. Therefore, the price may continue to rise as bulls target the previous high at 1.1420.
The XAU/USD pair rose to an intraday high of 1776, which is the highest it has been since 2012. On the daily chart, the price is above the 50-day and 100-day exponential moving average while the RSI and MACD are moving upwards. The current trend implies that bulls are in control and that the price may continue to rally as they target the all-time high of 1920. To do this, they will need to defend the next psychological resistance at 1800.
The AUD/NZD pair rose to an intraday high of 1.0745. On the four-hour chart, the price is above the 23.6% Fibonacci retracement level. It is also above the 50-day and 100-day exponential moving averages while the RSI has moved close to the overbought level of 70. The pair also seems to be forming a cup and handle pattern, which means that the price may continue to rise as bulls target the next resistance at 1.0800.