Global stocks rally ahead of US stimulus final vote
Global stocks rallied today ahead of a crucial stimulus vote in the US House of Representatives. With Democrats in control, the vote will merely be a formality. It will then head to the White House, where Joe Biden is expected to pass it. Distribution of the funds will then follow. In Europe, automakers like Daimler and Volkswagen and energy companies like Royal Dutch Shell and BP rallied. In the United States, futures tied to the Dow Jones and Nasdaq 100 rose by more than 0.25%. Bond yields also rose.
The price of crude oil rose slightly after dropping sharply in the past two days. The rise came even after data by the American Petroleum Institute (API) showed that inventories rose sharply last week. The Energy Information Administration (EIA) will release its official inventory numbers later today. Analysts believe that this data will show that inventories rose by 816,000 barrels, down from the previous week’s increase of more than 21 million increase.
The US dollar rose against most developed country currencies after the US published the latest inflation data. According to the Bureau of Statistics, the headline consumer price index (CPI) increased by 0.4% in February, leading to an annualised increase of 1.7%. The annual increase was better than the previous month’s increase of 1.4%. The core CPI increased by 0.2% leading to an annual gain of 1.3%. Economists believe that the overall inflation will continue rising and then retreat later this year.
The three-hour chart shows that the EUR/USD pair was little changed in the afternoon session today. It is trading at 1.1895, which is a few pips below yesterday’s high of 1.1915. This price is a few points above the upper side of the Envelopes indicator. It is also slightly below the important resistance level at 1.1955. Meanwhile, the signal line of the MACD has made a bullish crossover with the histogram. Therefore, the pair may resume the downward trend as bears target this week’s low at 1.1832.
The XBR/USD declined to 66.30 and then bounced back to 67.30. On the four-hour chart, this price has moved slightly above the important support at 66.70. It is also slightly above the ascending yellow trendline. It is also being supported by the short and long-term moving averages and the Bollinger Bands. Therefore, the pair will likely resume rallying as investors target the YTD high of 71.
The DAX index rallied to an intraday high of €14,476, helped by the automobile sector. The four-hour chart shows that the index was previously making an ascending triangle channel. The index has also moved above the 25-period and 50-period exponential moving averages while the MACD has also continued to rise. Therefore, the index will likely continue rising as bulls eye the next key resistance at €15,000.