TRUMP IS FED UP WITH THE WORLD TRADE ORGANIZATION
The euro jumped to the highest level since Wednesday after European union officials made a deal on immigration. In a meeting in Brussels, the European Union leaders agreed to take a tougher stance on immigration. Countries like Italy had previously complained about the burden brought by immigrants. Angela Merkel, the current chancellor of Germany made a passionate plea to the EU arguing that immigration was threatening the stability of the region. The jump on the euro was strengthened further by the release of strong employment numbers from Germany and rising inflation.
The global stocks markets rose today as investors moved past the trade war fears. This was the first major rise by Chinese stocks which are currently in a bear market. The markets ignored a new report by Axios that said that Donald Trump was considering withdrawing the US from the World Trade Organization. The withdrawal would have significant implications for the world markets because of the influence the US has over the body. Most likely, traders believe that Trump will not follow his instincts and withdraw from the body. However, historically, Trump has done unconventional things like exiting from the Paris deal, Iran deal, and moving the US capital to Jerusalem. From the data side, reports showed that personal income rose by 0.4% which was in line with the expectations and higher than the 0.1% released in April.
The pound jumped slightly against the dollar after the country reported better than expected GDP numbers. The final reading of the Q1 GDP numbers showed that the economy expanded by 0.2% which was higher than the expected 0.1%. It was also higher than the previously-released 0.1%. The number of mortgage approvals and lending to individuals increased more than expected. The main drawback was from the quarterly business investments which reduced more than forecasted. The decline was attributed to the increased uncertainty on Brexit with businesses being in a wait and see mode.
The Canadian dollar jumped after the GDP numbers were released. In April, the country’s GDP rose by 0.1% which was higher than the expected 0.0%. The figure was however lower than the previously released 0.3%. In addition, the Industrial Product Price Index (IPPI) rose by3.1% which was better than April’s 0.1%. On a monthly basis, this rose by 1.0% which was better than the expected 1.2%.
After initially rising, the USD/CAD pair fell after the impressive data releases from Canada. The pair is now trading at 1.3220 which is in line with the 14-day moving average. After being flat for the past few weeks, there is a possibility that the pair could start a new downward trend which could see it test the important support of 1.3050.
After positive news and data from the European Union, the EUR/USD pair jumped to the highest level in two days. This jumped helped the pair recover and is currently trading at 1.1660, which is slightly above the 50% Fibonacci Retracement level. At this price, the pair has struggled to find direction with upward and downward movements being resisted. If the bulls take control of the pair, traders should expect it to test the 1.17200 level.
After days of declines, the GBP/USD pair found a support at the 1.3050 level. Today, the pair continued the surge started yesterday and is currently trading at 1.3160. The price is slightly above the short and medium-term moving averages and is currently between the 50% and 38.2% Fibonacci Retracement levels. Earlier today, it tested the 50% level. If it crosses it again, the price could break out to the 1.3210 level which is the 61.8 Fibonacci Retracement level.