Global stocks retreat as focus turns to US stimulus talks
Global stocks declined today, erasing some of the gains made yesterday, as traders waited for the first debate between Joe Biden and Donald Trump. In the debate, they anticipate hearing how the policies of the two candidates differ, especially on business. The stocks are also falling as the market continues to focus on stimulus talks between Congress and the White House. Democrats have suggested spending more than $2.2 trillion to help cushion the economy from the ongoing crisis. This is a higher figure than the $1.5 trillion that the White House has suggested. Republicans are likely to reject the deal, which means that the country could see more weakness in the near term.
The euro rose today as traders reflected on relatively strong confidence data from Europe. According to the European Commission, the services and industrial sentiment increased to -11.1 in September. That was a better figure than the -17.2 and -12.7 that analysts were expecting. Other data showed that the business and consumer survey rose from 87.7 to 91.1 while the consumer confidence improved to -13.9. These numbers send the signal that the European economy is doing relatively well as more countries reopen.
The British pound wavered today as traders focused on Brussels, where the final round of Brexit talks is happening. While the UK and the EU remain further apart on the issues, analysts are optimistic that the two sides will make progress this week. The pound is also wavering because of relatively strong data from the UK. The numbers showed that mortgage approvals increased by more than 84.7k in August. That was better than the 73k that analysts were expecting. Also, the total amount of mortgages rose was more than £3.1 billion.
The hourly chart shows that the EUR/USD has been on a strong upward trend since September 25 when it dropped to 1.1611. The price is trading along the 23.6% Fibonacci retracement level. It is also supported by the dynamic support of 25-day moving average. The price is also being supported by the green ascending trendline. Therefore, the pair will likely remain in a bullish trend so long as it is buoyed by these supports.
The GBP/USD pair is little changed today as traders focus on strong data from the UK and the ongoing talks in Brussels. The hourly chart shows that the pair is in the midst of a bullish flag formation, which is usually a continuation pattern. Like the EUR/USD, this pair is also being supported by the 25-day exponential moving average. It is also along the middle line of the Donchian channels. Therefore, the price is likely to remain in the current consolidation phase as traders wait for the outcome of talks.
The AUD/NZD pair has been in a strong upward trend after it reached a low of 1.0716 yesterday. This has seen rise to the current level of 1.0800, which is above the descending trendline shown in green. The 25-day moving average has also started to reverse. Also, the pair’s relative strength index has managed to rise and is now close to the overbought level of 70. Therefore, the pair is likely to continue rising as bulls aim for the next resistance at 1.0850.