Global stocks rally accelerates on Federal Reserve optimism

Global stocks rose today as traders continued to react to the statement by Federal Reserve at the virtual Jackson Hole summit. In Europe, the DAX index rose by 0.40% while the CAC 40 and Stoxx 60 rose by 0.70% and 0.30%, respectively. In Japan, the Nikkei 225 rose after Warren Buffett revealed that he had invested in five of the country’s biggest trading companies. In the United States, futures tied to the Dow Jones and S&P 500 rose by 0.50% and 0.25%, respectively. 

The Australian dollar and the Chinese yen were little changed as traders reacted to mixed data from Australia and China. Data released by China Logistics showed that the country’s manufacturing PMI declined to 51.0 in August from the previous month’s 51.1. That decline was lower than the 51.2 that analysts were expecting. On a positive note, activity in the non-manufacturing sector increased to 55.2 in August from the previous 54.2. That increase led the composite PMI to rise to 54.5. Meanwhile, in Australia, data from the statistics office showed that business inventories declined by 3% in the second quarter. Gross operating profits rose by 15% in the quarter. 

The euro rose against the US dollar as investors reacted to better preliminary consumer price index data from Europe. According to the statistics office, the headline CPI rose to 0.0% in August from -0.9% in the previous month. The CPI fell by 0.5% on a year-on-year basis. At the same time, the headline CPI rose by 0.3% in August while in Germany, the CPI rose by 0.0%. Still, these numbers are significantly below the 2% target set by the European Central Bank. Elsewhere, in Canada, the Raw Materials Price Index (RMPI) rose by 3% while the Industrial Product Price Index rose by 7.0% in July.

EUR/USD

The EUR/USD pair rose to an intraday high of 1.1921. On the four-hour chart, the price has moved above the 50-day and 100-day exponential moving averages. The price is also above the dots of the Parabolic SAR indicator. Also, the price is above the ascending trend line that is shown in pink. Therefore, the price is likely to continue rising as bulls aim for this month’s high of 1.1970.

XBR/USD

The XBR/USD pair rose slightly today. The pair is trading at 46.36, which is in the same tight range it has been this month. On the daily chart, the price is slightly below the 50% Fibonacci retracement level. It is also slightly above the 50-day and 100-day exponential moving averages. Also, it is forming a rising wedge pattern, which means that the pair will likely break out lower in due time. This is further evidenced by the falling signal and main lines of the MACD.

USD/JPY

The USD/JPY pair rose to an intraday high of 105.90 even after the strong industrial production data from Japan. By rising, the pair erased the losses made on Friday, when Shinzo Abe announced his resignation. The price is between the 23.6% and 38.2% Fibonacci retracement and slightly below the 50-day and 100-day exponential moving averages. While the pair is likely to continue rising, there is also a possibility that it will retest Friday’s low of 105.20.