US futures rise on hopes of more mergers and acquisitions

The British pound is relatively unchanged today as traders reflect on the economic data from the UK. According to the Office of National Statistics (ONS), the UK economy grew by 2.1% in August after growing by 6.4% in July. That was an early indication that the UK economy is starting to slow after it recorded strong growth in May and June. Further, construction output, manufacturing production, and industrial production rose by 3.0%, 0.7%, and 0.3%, respectively. Perhaps, the sterling remained steady since the market is positive that the UK and the EU will reach a Brexit agreement by October 15.

US futures pointed to a higher open as investors remained optimistic that a stimulus deal will be reached. Earlier this week, Donald Trump announced that he was postponing talks on stimulus until after the election. He later changed his mind after receiving criticism by Democrats and Republicans. According to the Wall Street Journal (WSJ), Steve Mnuchin and Nancy Pelosi have continued negotiations. 

The market is also receptive of the current wave of mergers and acquisitions. Yesterday, Morgan Stanley confirmed that it was acquiring Eaton Vance in a $7 billion deal. On the same day, WSJ said that AMD was considering acquiring Xilinx. Other deals announced today was that the London Stock Exchange (LSE) was selling Borsa Italia while Citadel Securities was buying IMC.

The Japanese yen rose slightly against the US dollar as investors reacted to mixed data from the country. According to the statistics office, the country’s household spending bounced back by 1.7% in August after falling by 6.5% in the previous month. The spending declined by 6.9% on an annualised basis, in line with analysts’ forecasts. On the other hand, overtime pay dropped by 14% while the average cash earnings declined by 1.3%. These numbers show that the Japanese economy is still struggling. 

EUR/USD

The EUR/USD pair rose to an intraday high of 1.1800, which is the highest it has been since Tuesday this week. The price is above the 25-day and 15-day exponential moving averages on the four-hour chart. It is also above the ascending trendline that is shown in pink while the signal and main lines of the MACD are still above the neutral line. Therefore, the pair is likely to continue rising as bulls aim for the next resistance at 1.1850. 

XAU/USD

The XAU/USD pair rose to an intraday high of 1916, which is the highest it has been since Tuesday. On the hourly chart, the price has re-entered the previous ascending channel shown in green. It has also moved above the 25-day EMA while the RSI has continued to rise above the overbought level of 70. Therefore, the price is likely to continue rising as bulls aim for the upper side of the channel at 1,935.

GBP/JPY

The GBP/JPY pair rose to an intraday high of 137.05. On the four-hour chart, the price has moved above the 50% Fibonacci retracement level. It is also above the short and medium-term moving averages while the DeMarker indicator has moved to the overbought level of 0.70. It is also above the ascending trendline that is shown in pink. Therefore, while the price is likely to continue rising, there is also a possibility that it will pull back because of the forming bearish flag pattern.