Hopes for German fiscal stimulus rise as factory orders slump
The euro rose today against the USD even after the market received more bad news from Germany. According to the country’s statistics office, factory orders declined again in August. The orders contracted by -0.6% after contracting by -2.1% in July. Today’s decline was worse than what traders were expecting. It was also the third straight month of declines in factory orders. The reason for the rise in the euro is that traders are expecting Germany to take fiscal policy measures to support the economy. The ECB has been vocal in asking for this support.
The Sterling rose today as traders continue to place their bets on Brexit. This is less than a week after Boris Johnson unveiled his plan for Brexit. The plan guarantees that there will be no hard border in Northern Ireland. However, it avoided the backstop measure that the European Union has demanded. Over the weekend, France president, Emmanuel Macron gave Johnson a week to come up with a better proposal. In his part, Johnson said that he was ready to make more compromise. Meanwhile, data from the UK showed that the house price index declined from 1.8% to 1.1%. On a MoM basis, the index declined from 0.2% to -0.4%. On another negative note, a report by Financial Times said that HSBC was planning to cut more than 10k jobs. This could hit the UK where the bank has a big presence.
The price of crude oil rose slightly after Donald Trump shifted his policy in Syria. In a statement, the White House said that the president had endorsed a Turkish military operation in the country. This will lead to a significant hit on Kurdish forces near the border with Syria. Kurds have been the main backer of the United States forces in the country. Turkey, on the other hand, considers these Kurds to be a terrorist group. This announcement goes against the recommendation of top officials in the Pentagon and at the State Department. It also means that the US military officials in the region will be pulled out.
The EUR/USD pair rose today to a high of 1.0990. It had declined to a low of 1.0960 earlier today. On the 30-minute chart, the pair’s price is slightly above the middle line of the Bollinger Bands. The RSI has moved slightly higher by climbing from 32 to 54. The dots of the Parabolic SAR are below the price. There is a likelihood that the pair will continue moving higher to test the important resistance line of 1.1000.
The GBP/USD pair rose to a high of 1.2333. On the 30-minute chart, this price was along the 61/8% Fibonacci Retracement level. The pair is now trading at 1.2320, which is slightly above the middle line of the Bollinger Bands. The money flow index indicator has continued to move higher. The same is true with the average true range indicator, which is viewed as a measure of volatility. The pair will likely continue being a bit volatile as traders receive more news on Brexit.
The XTI/USD pair rose today after the US announced a change of policy in Syria. The pair is now trading at 53.50. On the hourly chart, the pair is trading slightly above the 38.2% Fibonacci Retracement level. The pair’s price is also above the 14-day and 25-day moving averages. The RSI has just reached the overbought level of 70. The pair could continue moving higher to test the 50% Fibonacci retracement level of 53.97.