Good is bad as global stocks decline after impressive US NFP
Asian stocks were subdued in early morning trading as investors continued to wonder about the future of US rate cuts. This happened after the impressive June jobs report, where the US added more than 224K jobs. This was much higher than the 160K the investors were expecting and the 75k jobs created in May this year. As a result, investors reduced their rate cuts expectations from three to two. In China, the Shanghai and Hang Seng indices declined by 75 and 11 points respectively. In Australia, the ASX declined by 75 points. In Europe and United States, futures too declined with the Stoxx and Dow falling by 13 and 40 points respectively.
The Japanese yen strengthened against the USD after the country released important economic data. In May, the core machinery orders declined by -3.7%, which was slightly better than the expected decline of -3.9%. In April, the machinery orders had increased by 2.5%. On a MoM basis, the orders declined by -7.8%, which was worse than the expected decline of -3.6%. In April, the orders had increased by 5.2%. In June, the country’s bank lending increased by an annualized rate of 2.3%, which was lower than the expected increase of 2.6%.
Today, investors will receive the German trade numbers. In May, the country’s exports are expected to have increased by 0.5%, which was slightly higher than the previous decline of -3.7%. The imports are expected to have increased by 0.3% while the trade surplus is expected to decline slightly to EUR 16.8 billion. Meanwhile, the industrial production is expected to have increased by 0.4%, which will be higher than the previous decline of 1.9%. These numbers are essential because Germany is the most important economy in the European Union.
On Friday, the EUR/USD pair declined sharply after the US released the NFP data. The pair declined to a low of 1.1206. This was the lowest decline since June 20. This decline was a continuation of the downward trend that started on June 25. Today, the pair moved slightly upwards and is currently trading at 1.1227. On the hourly chart, this price is below the 25-day and 50-day moving average although volumes have been subdued. The price is along the middle line of the Bollinger Bands. The pair is likely to resume the downward trend to test levels below the 1.1200 support.
The XAU/USD pair declined sharply on Friday after the impressive US jobs data. The pair declined to a low of 1386.50. Today, the pair moved up slightly in the Asian session and is currently trading at 1398. On the four-hour chart, the current price is between the important support of 1381 and the important resistance level of 1439. The RSI has moved slightly lower to the low of 40. The pair is likely remain to within this channel as traders wait for the Fed chair testimony scheduled for tomorrow.
The USD/JPY pair declined to a low of 108.36. This was lower than Friday’s high of 108.63. On the hourly chart, the price is above the 25-day and 50-day moving averages while the RSI has moved lower from a high of 88.89 to a low of 56. The accumulation/distribution indicator has continued to soar. The pair will likely move lower to test the important support of 108.