DAX, CAC, and Stoxx rise as EU economy slows

The British pound bounced back as data showed that home prices continued rising. According to Nationwide, the average house price in the UK jumped to £267,600 in April as demand continued rising. Prices rose by £2,000 on a month-on-month basis or 12.1% on a year-on-year basis. However, the increase was slower than most analysts were expecting. Housing demand has risen while inventories has been subdued. Therefore, there are concerns about whether this demand will continue as the Bank of England hikes interest rates. In a note, an analyst at Capital Economics said that home prices will drop by about 3% in 2021 and 1.8% in 2024.

The euro rose against the US dollar even after data showed that many European economies were slowing. In France, data revealed that the economy stagnated in the first quarter while inflation jumped by 5.4% in April. In Italy and Spain, their economics contracted while in Germany, the economy expanded by just 0.2%. The statistics agencies attributed this performance to the soaring prices, which helped to slow consumer and business demand. Meanwhile, according to Eurostat, preliminary data revealed that inflation rose from 7.4% to 7.5% while core CPI rose from 2.9% to 3.5%.

European stocks were deeply in the green as the earnings season continued. The Stoxx 50, DAX, and CAC 40 indices rose by more than 1% while the FTSE 100 index rose by more than 0.40%. In the UK, AstraZeneca said that its sales jumped by 60% in Q1 as demand for its Covid-19 vaccine and rare disease medicines rose. Its sales rose to $11.4 billion as revenue from its oncology business rose to $3.6 billion. Reckit Benckiser, the consumer products company, said that its revenue rose to £3.4 billion as it hiked prices by over 5%. NatWest, formerly known as Royal Bank of Scotland, said thar its revenue rose by 17% to £3 billion because of mortgage growth and higher interest rates.

GBP/USD

The GBPUSD pair rose as investors rushed to buy the dip. It rose to a high of 1.2560, which was the highest point since Wednesday. It moved above the middle line of the Bollinger Bands. At the same time, the Relative Strength Index (RSI) moved above the oversold level of 30. The Stochastic Oscillator moved to the overbought level. The pair will likely keep rising as bulls target the upper side of the Bollinger Bands.

EUR/USD

The EURUSD pair also rose as the strength of the US dollar faded. It moved to a high of 1.0575, which was higher than this week’s low of 1.0465. It moved above the middle line of the Bollinger Bands while the Relative Strength Index moved above the oversold level. The pair is also nearing the overbought level while the Average Directional Index (ADX) has started dropping. Therefore, it will likely keep falling since this is the last trading day of the month.

XAU/USD

The XAUUSD pair rose sharply after China announced a new stimulus. The pair rose to a high of 1,916, which was the highest level since April 26th. It also moved above the important resistance level at 1,911 and is along the upper side of the Bollinger Bands. The Stochastic Oscillator moved above the overbought level while the Relative Strength Index (RSI) moved above 50. The pair will likely keep rising.