Global Stocks Fall along with Traders Expectation of Trade Deal

The pound rose today as data showed that the UK avoided a technical recession in the third quarter. Data from the Office of National Statistics (ONS) showed that the economy expanded by an annualized rate of 1.0%. This was the lowest growth rate since 2010. The economy expanded by 0.3% on a QoQ basis. According to the ONS, this growth was led by services and construction. The auto industry also saw some improvements following the shutdowns experienced in April. Other data showed that industrial production declined by -1.4% in September while manufacturing production declined by -1.8%. The country’s trade deficit widened to £12.54 billion from the previous £10.83 billion.

The Japanese yen strengthened against the USD after Japan released its machinery order numbers. The data showed that in September, core machinery orders rose by 5.1%. This was better than August’s decline of -14.5%. It was nonetheless lower than the consensus estimates of 7.9%. The core machinery orders declined by -2.9%, which was lower than the consensus estimates of -2.4%. Meanwhile, the country’s current account declined to ¥1.613 trillion from the previous ¥2.15 billion. The current account measures the difference in value between exported and imported goods, services, and interest payments. Meanwhile, the BOJ released its summary of opinions, which showed that participants considered more actions to accelerate inflation to its target of 2%.

Global stocks declined today as the market started showing concerns on the US and China trade talks. Last week, the market reacted positively after China announced that it had agreed in principle with the US about lowering tariffs in phases. However, the market is now showing signs of wariness as the US has not confirmed the news, and will be waiting for President Trump’s speech at the Economic Club of New York tomorrow. He is expected to talk about the trade relations between China and the country. In China, both Shanghai and China A50 declined by 55 and 227 points respectively. The Nikkei declined by 60 points and in Europe, Stoxx 50, DAX, and CAC declined by 15, 60, and 13 points respectively. In the United States, Dow futures declined by 123 points while S&P500 declined by 13 points.

EUR/USD

The EUR/USD pair rose slightly as the market received better-than-expected industrial production data from Italy. On the hourly chart, the pair is trading at 1.1036. This was the highest level since Friday’s low of 1.1015. The price is slightly above the 14-day and 28-day moving averages. The two averages appear to be trying to make a bullish crossover. The pair may continue to move higher to test the 23.6% Fibonacci Retracement level.

GBP/USD

The GBP/USD pair rose sharply after ONS released GDP data. The pair rose by almost 50 basis points to a high of 1.2822. On the hourly chart, this price is above the 23.6% Fibonacci Retracement level while the RSI rose from a low of 30 to 65. The price was along the upper line of the Bollinger Bands while the ADX rose to 25. The pair may continue to move upwards and likely test the 38.2% Fibonacci Retracement level of 1.2845.

USD/JPY

The USD/JPY pair declined sharply after Japan released the machinery order numbers. The pair dropped to a low of 108.90. On the hourly chart, the price is slightly above the 61.8% Fibonacci Retracement level. It was also below the 14-day and 28-day moving averages. The RSI dropped from a high of 70 to a low of 31. The main and signal lines of the RVI have remained below the neutral line. The pair may continue to move downwards to the 50% Fibonacci Retracement level of 108.68.