Euro rises after better German confidence and GDP data

The euro rose slightly against the US dollar as investors reacted to the better economic numbers from Germany. According to the German statistics office, the country’s economy contracted by 11.3% in the second quarter. That slowdown was better than the 11.7% that analysts were expecting. It dropped by 9.7% on a quarter-on-quarter basis. Other data by the Ifo Institute showed that business expectations increased to 97.5 in August from 96.7 in July. The current assessment and business climate index increased to 87.9 and 92.6, respectively. 

Futures tied to the Dow Jones Industrial Average rose as investors reacted to the index’s rebalancing. In a statement yesterday, the committee that rebalances the index said that it would remove ExxonMobil, Pfizer, and Raytheon. These companies will be replaced by Salesforce.com, Amgen, and Honeywell. The rebalancing is mostly because of the recent decision by Apple to split its stock price. In its recent earnings call, the company said that it would conduct a one to four splits. This split will make Apple’s shares, currently trading at $503 a bit more affordable to most traders.

The US dollar index declined slightly as the market waited for the upcoming new home sales and consumer confidence data. Analysts expect the data to show that new home sales increased by 1.3% to 785k in the previous month. That is after they rose to 776K in June. These numbers will come a few days after data showed that existing home sales numbers jumped in the previous month. The dollar will also react to the consumer confidence data that will come out later today. Analysts expect that the confidence will rise to 93.0 from the previous 92.6.

EUR/USD

The EUR/USD pair is up slightly as traders reacted to the positive numbers from Germany. The pair is trading at 1.1827, which is slightly below the intraday high of 1.1842. On the four-hour chart, the price is along the 50-day and 100-day simple moving averages. Also, the Average True Range (ATR) has been falling. The price is also slightly above the ascending white trend line. Therefore, the pair is likely to continue rising as bulls aim for the next resistance at 1.1850.

GER30

The DAX index rose today as investors remained optimistic about the recent progress in the US and China trade talks. The index is trading at €13,156, which is above Friday’s low of €12,619. On the daily chart, the index remains above the 50-day and 100-day exponential moving averages. Also, the price is above the 23.6% Fibonacci retracement level while the accumulation and distribution indicator has continued to rise. The index is likely to continue rising as bulls aim for the next resistance at €13,200.

XAG/USD

The XAG/USD remained in a holding pattern as investors reflected on the recent rally of silver prices. The pair is trading at 26.50, which is lower than this year’s high of 29.83. On the daily chart, the price is still above the short and long-term moving averages. The signal line has also crossed the mainline of the MACD while the Average True Range (ATR) has started to fall. Therefore, the pair may remain at the current range in the near term as investors ponder on the next moves for silver prices.