Stocks rally as world’s biggest trade deal signed
Global stocks rallied today as the market reacted to positive economic data from China and Japan. They also reacted to a new trade deal signed during the weekend. The new deal, which is now known as RCEP includes countries like Japan, China, Australia, and Malaysia. In total, they have more than 2.2 billion people and a GDP of more than $26 trillion. That makes it bigger than the United States, Mexico, and Canada (USMCA) deal that replaced NAFTA early this year. While the deal will not have an immediate impact on these countries’ economies, analysts believe that the overall outcome is positive for the global economy.
Earlier today, data by the Chinese bureau of statistics showed that the country’s robust economy continued improving at the start of the final quarter of the year. The data showed that industrial production remained unchanged at 6.9% in October. That was slightly better than the median estimate of 6.5%. In the same month, fixed asset investments increased by 1.8% while the unemployment rate fell to 5.3%. Retail sales rose by 4.3% after rising by 3.3% in the previous month. These numbers provide further evidence of how strong the country’s recovery is.
The Japanese yen eased slightly today even after the Cabinet Office released strong economic numbers. The numbers showed that the country’s economy expanded by 21.4% in the third quarter, leading to a 5% increase on an annualised basis. The two figures were better than the expected increase of 18.9% and 4.4%, respectively. This performance was mostly because of a 2.9% increase in external demand and a 4.7% rise in private consumption. Further data showed that Japan’s capacity utilisation in the country rose by 6.4% in September.
The EUR/USD pair erased some of its earlier gains during the European session. The pair is now trading at 1.1841, which is slightly below the intraday high of 1.1865. Before the decline, the pair formed an inverted hammer pattern, which is usually bearish. It is now between the 25-day and 15-day moving averages. Also, the price is now at the lower side of the ascending channel that is shown in white. Therefore, the pair may bounce back and possibly retest the upper side of the channel at 1.1867. However, a strong decline below the current rally will possibly imply the start of a bearish trend.
The GBP/JPY pair wavered today after the strong economic data from Japan. It is trading at 138.10, which is slightly above the yellow trendline. This line is important because it is where it formed a triple top pattern in October. It is also slightly below the 50% Fibonacci retracement level. The signal line and histogram of the MACD have also moved below the neutral line. Therefore, the pair is likely to break out lower considering that it was initially on a strong downtrend. If it does, the next key level to watch is the 38.2% Fibonacci retracement level at 136.71.
The XBR/USD pair rose to an intraday high of 43.65. On the four-hour chart, the price has moved above the 14-day exponential moving average. The RSI has moved from last week’s high of 78.45 to today’s low of 55. The price is also at an important resistance because the current price is the highest it was in October. Still, the pair may resume the downward trend that was started last week when it reached a high of 45.42.