Global Stocks Mixed as the Market Worries about Trade

Global stocks were mixed today ahead of what is set to be a busy week for the markets. This week, the Federal Reserve will deliver its final interest rates decision for the year. The European Central Bank (ECB) will deliver its first rates decision under Christine Lagarde on Thursday. Donald Trump will also decide on whether he will hike China tariffs in the coming weekend. There are chances that he will, especially after the communist party ordered government agencies to get rid of foreign technologies. This decision will be a major blow to American companies like Dell, Microsoft, and HP. This could infuriate Trump, who may decide to escalate the trade war. In a recent statement, Trump said that he would be comfortable to wait to do a deal after the 2020 election. 

The Japanese yen gained against the USD after Japan released the final reading of Q3 growth numbers. The numbers showed that the economy expanded by an annualized rate of 1.8%. This was higher than the consensus estimates of 0.7%. It was also higher than the second quarter’s growth of 0.2%. The economy expanded by a quarterly rate of 0.4%, which was also better than the consensus estimates of 0.2%. This growth was mostly because of capital expenditure, which rose by 1.8%. Meanwhile, the country’s current account rose to ¥1.817 trillion, which was above September’s ¥1.613 trillion. The current account measures the difference in value between exported and imported goods, services, and interest payments. Also, the economic watchers current index rose to 39.4 in November from 36.7 in October.

The euro rose against the USD as the market received positive data from Germany. Exports increased by 1.2% in October. This was below the 1.5% increase in September but it was better than the consensus estimates of a -0.7% decline. Imports were unchanged. This was better than the expected decline of
-0.1%. As a result, the country’s trade surplus increased from €19.2 billion to €20.6 billion. In addition, the current account moved to €22.7 billion, which was better than the consensus estimates of €19.5 billion. Germany is Europe’s biggest economy and the most influential. In recent weeks, data has shown that the country’s economy hit a snag as the auto industry slowed.

EUR/USD

The EUR/USD pair soared today on the positive data from Germany. The pair is now trading at 1.1073, which is higher than Friday’s close of 1.1040. The price is above the 14-day and 28-day moving averages. It is also above the 61.8% Fibonacci Retracement level while the RSI has moved from the oversold low of 16.75 to a high of 57.05. The pair may show some volatility ahead of the FOMC decision on Wednesday.

USD/JPY

The USD/JPY pair declined today to a low of 108.42 after Japan delivered upbeat GDP data. The pair has formed a double bottom pattern as shown on the hourly chart below. The price is also above the 14-day and 28-day moving averages while the RSI has been moving lower. The DeMarker indicator is also trading along the oversold level. The pair may move below the current support or move lower to test the important support of 108.00.

GBP/USD

The GBP/USD pair rose today as the market continues to believe that Boris Johnson and conservatives will win the upcoming general election. The pair is trading at 1.3161, which is a few pips below the day’s high of 1.3170. The price is above the 14-day and 28-day moving averages on the four-hour chart. The RSI has moved to the overbought level of 70 while the momentum has started moving lower. This is an indication that the pair could decline in the next few days.