The euro declined today as the market reacted to mixed economic data from Europe. The flash manufacturing PMI data by Markit showed some weaknesses in the service and manufacturing sectors. The flash service manufacturing PMI data declined from the previous 52.8 to 52.2. In France, the services PMI declined from 52.4 to 51.7. Meanwhile, the manufacturing PMI in the EU was 47.8, which was better than the previous 46.3. A PMI number of below 50 is usually interpreted as an indicator of contraction. These numbers came a day after the European Central Bank started a full-year review of monetary policy. In an interview with Bloomberg, Christine Lagarde emphasized that the bank could be forced to intervene during this review.
The sterling declined today even after the market received positive economic data. According to Markit, manufacturing activity rose sharply this month. The PMI rose to 49.8, which was the highest level since May last year. It was better than the consensus estimates of 47.6. The services PMI increased to 52.9, which was the highest level since October 2018. This is a positive figure considering that services constitute the biggest part of the UK economy. These numbers could influence the Bank of England’s decision in the coming week. In the past few weeks, the market has been betting that the bank will slash rates this year.
Global stocks rose today as the market focused on positive corporate earnings. The earnings season has been relatively positive. Just last week, all major banks, except Wells Fargo reported better earnings. This week, companies like IBM, Atlassian, Kimberley-Clark and American Airlines reported better-than-expected results. There was some negative news as well. In Europe, Remy Cointreau’s shares had the worst day since 2009 as the company’s sales dropped. Another disappointment was Ericsson, the telecommunication company. The company’s stock fell as it reported a smaller-than-expected rise in fourth quarter earnings.
The EUR/USD pair declined to a low of 1.1030. This was the lowest level since November 29. The pair has been declining since January 2, when it was trading at 1.1240. The price is below all the short and medium-term moving averages on the four-hour chart. The price is also below the dots of the Parabolic SAR while the RSI has reached the oversold level of 30. The pair may continue to decline during the American session.
The GBP/USD pair declined from an intraday high of 1.3172 to an intraday low of 1.3080. The price is along the lower line of the Bollinger Bands. It is also below the 14-day and 28-day exponential moving averages. The RSI has also declined sharply. The same is true with the Moving Average of Oscillator. The pair may continue to decline during the American session.
The AUD/USD pair rose yesterday after the market received positive jobs numbers from Australia. The pair rose to a high of 0.6878. It then found some resistance that is shown in red below. The pair then declined during the American session. It is now consolidating, which is shown by the yellow rectangle. The pair may breakout in either direction. This is likely to remain until the following week, when Australia will report its inflation data.
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