Global markets rise as trade optimism returns
The US stock market ended the day higher after a report said that Trump officials are thinking to reduce tariffs on Chinese imported goods. The new strategy aims at pressuring China to offer broad concessions during the current trade negotiations. Such a move will increase the chances of a deal being made between the US and China before the March deadline. As a result, the market turned positive with the Dow gaining by more than 160 points. In Asia, the Hang Seng and the Shanghai Composite Index rose by 260 and 20 points respectively. In the US, Dow and Nasdaq futures gained by 70 and 17 points respectively.
The Japanese yen declined in overnight trading as data from Japan showed weaker inflation. The numbers from the Japanese statistics office showed that national inflation rose by 0.7% in December. This was lower than the consensus estimate of 0.8% and November’s 0.9%. The country’s low inflation rate has been a major concern for the BOJ. With inflation well below the target of 2%, there is a possibility that the period of low interest rates will continue.
Today, traders will receive important numbers from the United Kingdom and Canada. In the UK, traders will receive the retail sales numbers. On a YoY basis, the retail sales are expected to have risen by 3.6% in December. The core retail sales are expected to rise by 3.9%, which will be higher than the previously-released 3.8%. In Canada, the headline CPI is expected to rise by an annualized rate of 1.7% while the core CPI is expected to rise by 1.5%.
The EUR/USD pair was relatively unchanged as volatility slumped. The pair is now trading at 1.1395, which is still lower than the YTD high of 1.1570. On the hourly chart, the Average True Range (ATR) indicator has continued to decline while the moving averages are along the price. The current consolidation could lead to major movements in days to come.
The USD/JPY pair continued the slow climb that was started on the first trading day of the year. Since then, the pair has moved from a low of 106.4 to the current high of 109.4. The gains accelerated after the weaker CPI numbers. On the hourly chart, the current price is above the 42-day and 21-day EMAs even as the RSI has continued to move up while the momentum indicator remains above the important level of 100. The pair will likely continue moving up and if it does, it could reach the 110 level.
The price of Brent crude oil jumped as traders cheered the progress of the ongoing trade talks. It reversed earlier losses that came up after OPEC said that demand will be lower this year. The XBR/USD pair reached a high of 61.80. The hourly chart shows that the pair has struggled to move past the YTD high of 62.50. The current price is above the short and long-term moving averages. There is a possibility that the price will retest the previous highs.