European and American equities retreat ahead of Powell speech
European equities and American futures declined ahead of an important speech by Fed Chair Jerome Powell. Global bond yields rose ahead of this speech. In Europe, the DAX and FTSE 100 indices declined by 0.80% and 1.25% while in the United States, the Dow Jones and S&P 500 futures fell by more than 0.50%. In the speech, Powell will likely talk about the recent actions in the bond market, the upcoming stimulus package, and the actions the bank is expected to take in the near term.
European stocks also declined after relatively weak economic numbers from the region. According to Eurostat, retail sales declined by 5.9% in January after rising by 1.8% in December. The sales fell by an annualised rate of 6.4% because of the lockdowns many countries implemented. Further, the unemployment rate remained steady at 8.1%. These numbers came a day after Germany announced that it will start phasing out the ongoing lockdowns.
The British pound wavered today as investors digested the annual budget. In it, the government announced that it would increase the corporate rate to 25%. It will also extend the ongoing furlough program and stamp duty reprieve. Also, the government will provide funds to help high street retailers who were mostly deemed non-essential. Earlier today, data by Markit revealed that the construction PMI increased from 49.2 to 53.3. This was better than the median estimate of 51.0.
The EUR/USD declined to an intraday low of 1.2026 and then pared back some of these losses. On the 15-minute chart, the pair is below the dots of the Parabolic SAR and the 14-day double exponential moving average. Also, the histogram and the signal line of the MACD are below the neutral level. Therefore, the pair may resume the downward trend as bears target the next key support at 1.200.
The XBR/USD pair declined to an intraday low of 63.12 and then bounced back to 63.60. On the 30-minute chart, the pair is above the lower side of the ascending channel. It is also inside the Ichimoku cloud. The signal and histogram of the MACD have moved below the neutral line while the Average True Range (ATR) has risen. Therefore, the pair may experience significant volatility as the OPEC+ meeting goes on.
The DAX index declined to an intraday low of €13,955. On the four-hour chart, the index has formed an ascending triangle pattern whose upper resistance is at €14,173. The index volume has declined while the MACD is slightly above the neutral line. In the near term, the index may remain at the current range and then make a bullish breakout.