Aussie and base metals rise as China manufacturing rebounds

The Australian dollar, copper, and other metals rose today as investors reacted to the upbeat manufacturing PMI data from China. According to China Logistics, the country’s manufacturing PMI rose to 50.9 in June from the previous 50.6. Non-manufacturing PMI also rose to 54.4, which is a sign that the economy is recovering. The Australian dollar rose because China is Australia’s most important market for goods and services. Similarly, base metals like copper rose because China is the biggest consumer. Tomorrow, we will receive the country’s PMI data from Caixin.

The euro erased the gains made yesterday even as data from the eurozone showed that inflation was improving. According to Eurostat, preliminary headline CPI increased from the previous -0.1% to 0.3%, as the bloc reopens. The CPI rose by 0.3% on a year on year basis after rising by 0.1% in the previous month. The core CPI, which excludes the volatile food and energy products, rose by 0.3% in June. It rose by 0.8% on a year on year basis. The currency has risen in the past few days as Angela Merkel readies to become the next EU president. Also, it has reacted to a truce between the ECB and Bundesbank.

European stocks and American futures rose today even as the number of coronavirus cases in the United States continued to rise. The DAX index rose by 0.7% while the CAC 40 index rose by 0.33%. The FTSE 100 declined mostly because of Royal Dutch Shell, which reported a large $22 billion write down of its assets. These write downs are mostly because the firm expects the long-term price of oil to be about $50, down from the previous $60. The decision came a few weeks after BP too wrote-down assets worth more than $17 billion. Later today, global stocks will react to a statement by Jerome Powell. 

EUR/USD

The EUR/USD declined to an intraday low of 1.1196. On the four-hour chart, the price moved below the lower line of the triangle pattern. It is also below the 50-day and 100-day exponential moving average while the RSI has dropped to the lowest level since Friday. The pair may continue falling as bears attempt to test the 38.2% Fibonacci retracement level at 1.1157. This price is also slightly above the June 16 low of 1.1168.

GBP/USD

The GBP/USD pair declined to an intraday low of 1.2254, which is the lowest it has been since May 28. On the four-hour chart, the price is below the lower line of the previous triangle pattern. It is also below the 50-day and 100-day exponential moving averages while the signal line of the MACD is below the neutral line. The RSI has also moved to the oversold level of 30. The pair is likely to continue falling as bears target the next support at 1.2150.

GER30

The DAX index rose to an intraday high of €12,275. On the daily chart, the price is slightly below the 23.6% Fibonacci retracement level. It is also above the 50-day and 100-day exponential moving averages. Also, the signal line of the MACD and the Stochastic Oscillator have been falling. Therefore, the outlook for the index is neutral, with the key levels to watch being the support and resistance levels at €11,930 and €12,600, respectively.