The euro pared some of the losses made yesterday after the ECB announced its interest rates decision. As expected, the bank left interest rates unchanged and directed its economists to come up with a plan for complementing the low rates. This was interpreted to mean that the bank will slash interest rates in September. The bank could also restart the quantitative easing program that was ended in December last year. Later today, the market will receive the import price index from Germany and the consumer confidence from France.
US futures rose in the aftermarket trading after better-than-expected results from key companies. Google announced that it made an EPS of $14.21 on revenues of $38.9 billion. The company had an after-tax profit of more than $9.9 billion. It also announced a $25 billion share buyback plan. Starbucks was another good-performing company. It generated net earnings of more than $1.32 billion, which was higher than last quarter’s $852 million. Intel was another good performer after reporting a net income of more than $4.18 billion. On the negative side, Amazon disappointed after the quarter’s profit of $2.63 billion missed the forecast of analysts.
Earlier today, Tokyo released its CPI data. In July, the city’s headline CPI rose by 0.9%, which was below the previous 1.1%. The core CPI rose by 0.9%, which was slightly higher than the consensus estimate of 0.8%. Later on, Germany will release the import price index for June. This data will come a day after survey data from the country showed the manufacturing sector in a “freefall”. It will be two days after the country released weak PMI data. Sweden will release its retail sales numbers while Russia’s Central Bank will deliver its interest rates. In the US, the first preliminary reading of the second quarter GDP will be released. Investors expect that the economy grew by 1.8% after expanding by 3.1% in the previous quarter.
EUR/USD
The EUR/USD pair dropped sharply yesterday after the ECB decision. It reached a low of 1.1100, which was an important support as shown below. In the American and Asian sessions, the pair moved up, which was partly because of technical reasons after the company completed the first part of the cup and handle pattern. The pair is trading along the 14-day moving averages and slightly below the 28-day moving averages. The pair will likely continue moving up to test the 1.1220 resistance level, which is the 38.2% Fibonacci Retracement level.
GBP/USD
The GBP/USD declined sharply after Boris Johnson made his first speech in Parliament during which he vowed to get rid of the Irish border Brexit. EU’s Chief Negotiator, Michel Barnier said that removing the backstop guarantee was unacceptable. The GBP/USD pair is trading at 1.2448, which is below the 28-day and 14-day moving averages. The accumulation/distribution indicator continued to move higher. The pair will likely see major movements in either direction ahead of US GDP data.
AUD/USD
The AUD/USD pair continued the declines started on Friday last week. The pair reached a low of 0.6940, which is slightly below the 23.6% Fibonacci Retracement. On the hourly chart, the pair is slightly below the 14-day and 28-day moving averages. The momentum indicator remains below the 100-level while the stochastic indicator is moving lower. The pair will likely continue moving lower to 0.6900 in the next few weeks.
