FTSE 100 spikes on Brexit and US stimulus optimism
The FTSE 100 soared on the first day of trading after the UK and the European Union reached a Brexit deal on Thursday. The index rose by more than 2.70%, outperforming all other European bourses. Most companies in the index rose. Banks, however, dropped sharply because the deal left the important issue of financial services pending. The two sides committed to accelerate these talks with the next deadline being on March 31st. The index also joined other global indices in cheering the recently-passed stimulus deal in the United States.
The US dollar declined today in response to the new stimulus push in the United States. Yesterday, the Democrats-led House of Representative passed another stimulus package that will increase payouts to Americans from $600 to $2,000. That deal has been supported by President Donald Trump and a handful of Senate Republicans. However, it will be unlikely for the bill to pass the Senate in the near term. Instead, it will depend on who wins the upcoming Senatorial election in Georgia.
The price of crude oil ticked upwards today as traders continued to focus on the roll-out of coronavirus vaccines. So far, the European Union, the UK, and the United States have already accepted the vaccine manufactured by Pfizer and BioNTech. Earlier today, Novavax said that it was moving to the final stage of testing for its vaccine. With a vaccine, analysts believe that global travel will resume in 2021, leading to more demand for oil. Later today, the price will react to the upcoming inventories data by the American Petroleum Institute (API).
The FTSE 100 index soared to an intraday high of £6,672, which is the highest it has been since March this year. On the four-hour chart, the price is above the 25-period and 15-period exponential moving averages. It has also moved above the important resistance level of £6,637. The signal and main line of the MACD also moved above the neutral level. Therefore, the index will possibly continue rising as bulls aim for the next resistance at £6,650.
The EUR/USD pair rose to an intraday of 1.2260. The pair has also formed an ascending triangle pattern that is shown in yellow. It has also moved above the 25-day and 15-day exponential moving averages. The Triple Exponential Average (TRIX) has also moved above the neutral level. Therefore, the pair will possibly continue rising as bulls aim for the next resistance at 1.2275.
The GBP/JPY pair was little changed today and is trading at 139.83. On the four-hour chart, the price is slightly above the 25-day exponential moving average while the Average True Range (ATR) has continued to fall. The pair also seems to be forming a bearish pennant pattern that is shown in blue. Therefore, the pair will likely resume the downward trend as bears aim for the support at 139.00.