Global stocks shifted lower as the trade war continued to weigh on sentiment. In Europe, Stoxx 600 declined by 1.1% while in the United States, Dow futures declined by 0.4%. Traders are waiting for Donald Trump to make a decision on whether he will delay additional Chinese tariffs. This issue has been complicated by US congress, which is in the process of banning Chinese buses and railcars. The new bill will be tied to the upcoming spending bill that must be passed in the next few days. China has also complicated the situation. Yesterday, it was reported that the communist party had ordered all government agencies to get rid of foreign-made computers and technologies.
The sterling rose while UK stocks declined as the markets continued to wait for the upcoming general election. Expectations are that the conservatives will win by a wide margin. A poll released by ICM Research showed that Tories will win by 42% compared to Labour’s 36%. Meanwhile, economic data released by the Office of National Statistics (ONS) showed that the country’s economy flatlined in October. This resulted in its slowest annual expansion in 7 years. Industrial production rose by just 0.1% in October after falling by -0.3% in September. Manufacturing production rose by 0.2% in October, which was higher than the previous decline of -0.4%. Meanwhile, the trade deficit rose to £14.49 billion from the previous £11.52 billion.
The euro declined slightly even after some positive data from Europe. Survey data from Germany showed that the current conditions improved slightly to -19.9 from November’s -24.7. This was better than the consensus estimates of -22.2. The current conditions survey asks managers about their sentiment of the economy in the next six months. The economic sentiment rose from -2.1 to 10.7. This is a positive sign that corporate sentiment is improving in the biggest economy in the European Union.
The EUR/USD pair declined slightly even after the positive sentiment data from Germany. The pair declined slightly from a high of 1.1085 to the current low of 1.1074. In general, the pair has not made major moves this week. This is expected because the market is still waiting for the FOMC decision. The price is along the 14-day moving averages and slightly above the 28-day moving averages. The envelopes indicator has widened. The pair may continue consolidating ahead of the FOMC announcements tomorrow. The ECB will follow on Thursday.
The AUD/USD pair tanked today as trade concerns rose. The pair dropped to a low of 0.6800, which was the lowest level since December 2. As the pair declined, it moved past the important support of 0.6817. The pair is trading below the 14-day and 28-day moving averages. The RSI has moved below the oversold level of 30 while the price is between the 50% and 38.2% Fibonacci Retracement level. The pair may continue dropping. The next likely support will be the 23.6% Fibonacci Retracement level of 0.6780.
The GBP/USD pair continued to soar as the markets waited for the upcoming general election. The pair reached a high of 1.3177, which is the highest level it has been since May 15, 2019. The price is above the 14-day and 28-day moving averages. The RSI moved to the overbought level on the daily chart while the momentum indicator has risen. The momentum indicator has eased a bit. The pair may see some volatility ahead and after the election.
General Risk Warning for FX & CFD Trading. FX & CFDs are leveraged products. Trading in FX & CFDs related to foreign exchange, commodities, financial indices and other underlying variables, carry a high level of risk and can result in the loss of all of your investment. As such, FX & CFDs may not be appropriate for all investors. You should not invest money that you cannot afford to lose. Before deciding to trade, you should become aware of all the risks associated with FX & CFD trading, and seek advice from an independent and suitably licensed financial advisor. Under no circumstances shall we have any liability to any person or entity for (a) any loss or damage in whole or part caused by, resulting from, or relating to any transactions related to FX or CFDs or (b) any direct, indirect, special, consequential or incidental damages whatsoever.