Global Stocks Slide After Weaker Data From China

Global stocks declined today as investors continued to worry about global growth. The sell-off was accelerated by Chinese data that showed a slowdown in exports. In December, exports declined by 4.4%, which was the sharpest decline in more than 2 years. Similarly, imports declined by 7.6%, which went against the expected gain of 5.6%. The country’s trade surplus to the United States increased to $323 billion. This is likely because China got alternative sources of products it imports from the United States while US imports from the country increased. This is a clear evidence that the trade war initiated by the US is not working in its favor.

The price of crude oil declined today, continuing a trend that started on Friday when the price of WTI and Brent reached highs of $53.51 and $62.50 respectively. The reason for today’s decline was likely the continued fear that the global economy was weakening, which will lead to a slowdown in demand. There are also concerns that the OPEC member countries are not slashing supply as had been expected before.

The euro remained at significant lows after data from the Eurozone disappointed. The industrial production numbers for November declined by minus 3.3%, which was lower than the expected decline of minus 2.3%. On a MoM basis, production declined by minus 1.7%, which was lower than the expected decline of 1.5%. The decline in manufacturing was the sharpest since February 2016 and was evidence of a slowing EU economy.

EUR/USD

The EUR/USD declined today after weak economic data from the European Union. The pair reached an intraday low of 1.1450. On the 6-hour chart below, the pair’s price is between the 21-day and 42-day EMA while the RSI has moved from a high of 70 to the current 48. The pair is also trading within a narrow channel that has been forming since October last year. The pair will likely resume the downward trend because of the weaker European economy.

XTI/USD

The price of crude oil declined to an intraday low of $50.64. The price then started to move up and reached a high of $51.60. On the 30-minute chart below, the pair is trading on the upper line of the Bollinger Bands while the RSI has moved from the oversold level of 30 to the current level of 47. There is a likelihood that the price will resume the downward trend until it tests the $50 support.

USD/CAD

The USD/CAD pair was little moved today as traders waited for a speech by Jerome Powell. The pair is trading at 1.3277, which is slightly higher than the YTD low of 1.2180. On the hourly chart, the current price is slightly lower than the 23.6% Fibonacci Retracement level and higher than the 42-day EMA. At this level, the pair could breakout in either direction.