US stocks closed at an all-time high as the market placed its bets on a trade deal between the US and China. The market was also buoyed by upbeat earnings from US companies that have been releasing their earnings in the past few weeks. Stocks from other developed and emerging market countries in Europe and Asia have been on an upward trend as well. The MSCI World ex-US Index has risen by 14% this year and is nearing its record high. A deal between China and the US would help reduce trade tensions and provide a boost to international trade.
Chinese stocks rose even as data from the country showed that the services industry was weakening. The Caixin services PMI data declined from 51.3 to 51.1. This was below the expected growth to 52.8. This PMI data measures the activities of purchasing managers in the services industry. Last week, data from Caixin showed that manufacturing PMI was increasing after months of contraction. Later today, the market will receive services PMI data from the United Kingdom. The services PMI is expected to show an increase from 49.5 to 49.7. The market will also receive the ISM non-manufacturing PMI data, which is expected to show an increase from 52.6 to 53.5.
The Australian dollar rose after the Reserve Bank of Australia released its interest rates decision. Australian stocks declined slightly following the decision. In a statement, Governor Philip Lowe said that the Australian economy was doing well partly because of the previous interest rate cuts, increased government spending, and recent tax cuts. He also said that the housing market in the country was starting to improve. The bank expects the economy to grow by 2.25% this year and 3% in 2021.
The EUR/USD pair declined in overnight trading as the market reacted to positive progress on trade talks. The pair is trading at 1.1120, which is close to a weekly low. On the hourly chart, the pair had just formed a double-top pattern after finding significant resistance around the 1.1175 level. The 14-day and 28-day moving averages have made a bearish crossover while the RSI is trading close to the oversold level.
The GBP/USD pair declined yesterday, reaching a low of 1.2880. On the hourly chart, the pair had found significant resistance along the 1.2972 level. On the hourly chart, the price is between the lower and middle support level. The 14-day and 28-day moving averages have also formed a bearish pattern. The pair’s RSI has also been moving lower. The pair may continue to move lower to test the important support of 1.2850.
The AUS200 index declined after the relatively hawkish statement by Governor Lowe. The index is trading at $6696, which is slightly below the day’s high of $6715. On the hourly chart, this price is between the 50% and 38.2% Fibonacci Retracement level. It is also slightly below the middle line of the Bollinger Bands while the RSI has been on a downward trend. The potential levels to watch will be the 50% Fibonacci level of $6688 and the 38.2% Fibonacci level of $6700.