Global stocks rose today as the market reacted to the surprise manufacturing PMI data from China. Data from China Logistics Information Services showed that manufacturing and non-manufacturing activity rose in March. The two rose to 52.0 and 52.3 respectively, which was the biggest bounce ever. Activities rose as most of the country returned to work after the Lunar new year and from the Coronavirus lockdown. As the second-biggest economy in the world, investors pay close attention to the happenings in the country. In Europe, the Stoxx, DAX, and FTSE rose by 0.25%, 0.65%, and 0.70% respectively. In the US, futures pointed to slight gains by the Dow, S&P, and Nasdaq.
The price of crude oil rose today in response to the improving manufacturing activity in China. The price also rose after Trump said that he would talk to Putin in a bid to stabilize oil prices. Trump, who has always favoured low oil prices, has been surprised by the prospect of many American oil companies facing bankruptcy. This would threaten the US energy independence, which he has always touted. The prices also rose after US producers reduced their output. According to Goldman Sachs, the recent well closures has reduced output by about 1 million barrels per day.
The euro declined today as the market reacted to news that the ongoing shutdown could remain for months. The currency also declined after Eurostat released important inflation data. The numbers showed that the region’s CPI declined to a six-year low of 0.7%. This was lower than the consensus estimates of 0.8% and the previous rate of 1.2%. The rate was led by an increase of food and beverages. The core CPI declined from the previous 1.2% to a low of 1.0%. The main contributor to low inflation was the low energy prices.
EUR/USD
The EUR/USD pair declined to an intraday low of 1.0953, which was the lowest level since Thursday last week. The pair dropped below the important support of 1.0985, which is shown in yellow below. The price is below the 14-day and 28-day exponential moving average on the hourly chart. Similarly, the RSI has started to decline, and is now at the oversold level of 28. The pair may continue declining during the American session.
XBR/USD
The XBR/USD pair rose to an intraday high of 28.12, which is significantly higher than yesterday’s low of 25.51. The price is above the short and medium-term moving averages and close to the 50% Fibonacci Retracement level on the hourly chart. The RSI too has been rising, and is headed towards the overbought level of 70. The pair may continue rising as traders wait for more information on crude oil.
AUD/USD
The AUD/USD pared back earlier gains as traders faded on the positive news from China. The pair is trading at 0.9060, which is at the intersection of the red and yellow support lines shown below. The 14-day and 28-day exponential moving averages have made a bearish crossover while the RSI and Stochastic oscillator have been falling. The pair may continue declining ahead of the China and Australia PMI data from Markit.
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Editors’ Picks
AUD/USD: Bears attack 0.7700 ahead of China GDP
AUD/USD extends Friday’s downbeat momentum towards the 0.7700 threshold at the start of Monday’s Asian session. The Aussie pair declined the most since late October the previous day as the US dollar benefitted from the risk-off mood.
GBP/USD: Battles 1.3600 inside monthly rising wedge on 4H
GBP/USD fails to keep the uptick beyond 1.3606 during the initial Asian trading on Monday. The cable dropped to the lowest since January 12 on Friday but couldn’t slip beneath the 100-bar SMA. The rising wedge formation on ...
Gold: Further decline toward $1,800 remains on the cards
Gold failed to stage a convincing rebound this week. After losing more than 2% in the previous week, the XAU/USD pair extended its slide on Monday and touched its lowest level since early December at $1,817.
Darkest before dawn
The upcoming economic news is likely to be dreadful, and if it is not dreadful, it will be mostly ignored. This includes the release of the preliminary January PMI figures at the end of the week. Japan is extending its national emergency to another five prefectures, which collectively account for over half of the nation's GDP.
DXY breaks above key downtrend, eyes move above 91.00
USD has been strongly supported on what has shaped up to be a very much risk off final trading day of the week. Most G10/USD pairs have seen significant weakness, aside from CHF/USD and JPY/USD, given that the two currencies are also considered “safe havens”.