Global stocks soar as China slashes US tariffs
The euro was relatively unchanged today as the market followed Christine Lagarde’s speech to the European Parliament. In the statement, she said that the central bank had few options to respond to the growing threats to the economy. She said that while the EU economy remained resilient, actions of the ECB and government had left minimal options to address a major event. The ECB has already brought interest rates to negative and restarted the quantitative easing program. The same can be said about the Federal Reserve, which has lowered interest rates during a period of economic progress. It also increased the pace of balance sheet expansion.
Global stocks rose today as the market reacted to the positive private payroll numbers from the US. Data from ADP showed that nonfarm employment change rose by 291k in January. This was better than the consensus estimates of 156k. The market also reacted to the news from China. The country said that it would slash tariffs on $75 billion goods from the United States. The new cuts will apply from February 14. The cuts in tariff come at a time when there are concerns about whether China will be able to follow through on the first phase of the trade deal it signed with Washington. In the deal, the country pledged to buy goods worth more than $200 billion from the US.
The price of crude oil declined as a joint technical committee of OPEC+ leaders met to deliberate on how to respond to the coronavirus disease and other matters. The meeting started on Tuesday. According to Aljazeera, today’s meeting ended without a concrete recommendation. Saudi Arabia has been pressuring allies to increase supply cuts. The country has also suggested making a short-term 1 million a day cuts to supplies. It is also suggesting that the members agree to extend output cuts that were set to last until the end of March. Russia has resisted this pressure.
The EUR/USD pair was little changed as the market reacted to a statement by Christine Lagarde. The pair found important support at the current level of 1.0997. The price is along the 14-day exponential moving averages and slightly lower than the 28-day EMA. There is a possibility that the pair will remain at the current support level ahead of the official NFP data that will be released tomorrow.
The GBP/USD pair declined to an intraday low of 1.2958. As shown on the four-hour chart below, the price is along important support. The price is slightly below the 14-day and 28-day exponential moving averages while the RSI has been falling. There will be no major economic data from the UK later today and tomorrow. Therefore, there is a likelihood that the pair will remain in the current support ahead of the NFP data from the US.
The XBR/USD pair declined from an intraday high of 56.56 to an intraday low of 55. The market appears to be concerned about the spreading coronavirus disease and the OPEC+ response. The price is close to the lowest level since January last year. The RSI, which was rallying in the morning session, has started to decline. There is a possibility that the pair will retest the previous support of 53.70.