Global stocks rally as US bond yields retreats
US futures and international stocks rallied today as bond yields declined. The yield on the ten-year government bonds declined by 1.4% to 1.495%, which is slightly below this week’s high of nearly 1.60%. The 30-year yields also dropped to 2.229% after data by the government showed that inflation did not rise significantly last month. In total, core consumer prices rose by 1.4% while core CPI rose to 1.7%. Stocks are also rising ahead of the signing of the $1.9 trillion stimulus package by Joe Biden. The administration is also considering another $4 trillion spending package.
The Japanese yen rose against the US dollar even after the country published relatively weak producer price index (PPI) data. According to the statistics bureau, the country’s PPI declined from 0.5% in January to 0.4% in February. This was slightly below the median estimate of 0.5%. On an annualised basis, the PPI declined by 0.7% after falling by 1.5% in the previous month. These numbers came a few weeks after the agency said that core CPI dropped to 0.3% in January. Therefore, interest rates will likely remain the same for a while.
The euro rose against the US dollar after the latest ECB decision. As was widely expected, the ECB left interest rates unchanged and pledged to continue buying asset purchases to cushion the economy from the pandemic. The decision came at a time when the European economy is bouncing back from the previous contraction. Also, bond yields in some countries have continued to rise. Further, the bank has started to taper the pace of asset purchases.
The EUR/USD rose to an intraday high of 1.1964 before and after the ECB decision. On the hourly chart, the pair managed to move above the 1.1916 level, which was the neckline of the inverted head and shoulders pattern that was forming. It is also slightly below the 38.2% Fibonacci retracement level while the MACD indicator has continued to rise. Therefore, the pair may keep rising as bulls target the 50% retracement level at 1.2037.
The GBP/USD price rallied today mostly because of the relatively weaker US dollar. The pair rose to 1.3960, which was the highest level since Tuesday this week. The price has moved inside the Ichimoku cloud, which is bullish. It has also moved above the 25-day and 15-day exponential moving averages while the signal and main line of the MACD have moved above the neutral line. Therefore, the bullish trend will be confirmed if it manages to move above the Ichimoku cloud at 1.4020.
The USD/JPY declined to an intraday low of 108.45 because of the weaker US dollar. On the hourly chart, today’s lowest point was along the ascending trendline. The pair has also formed a triangle pattern and is slightly above the 25-day moving average. The ADX has also declined. Therefore, the pair could see a bullish breakout in the near term.