FINANCIAL MARKETS MIXED AS TRUMP MEETS PUTIN
Global stocks were mixed today after China’s growth grew at its slowest pace since 2016. Government data showed that the economy rose by 6.7% in the second quarter, which was in line with expectations. On a QoQ basis, the economy grew by 1.8%, which was higher than the expected 1.6%. In addition, industrial production, which is a measure of how industries are performing, rose by 6.0%, which was lower than the expected 6.5%. This is a reflection that the ongoing trade crisis is having an impact in the second largest economy in the world.
Traders focused on Helsinki where the US President met with Russia’s Vladimir Putin. This meeting comes after the ‘chaotic’ NATO meeting in Belgium and the meeting between Trump and Theresa May. It also comes two days after the US indicted 12 Russians in connection with the hacking of the Democratic servers. After the indictments, Democrats asked the US President to cancel the meeting while Republicans asked for caution during the meeting.
The UK pound rose today against the US dollar as Theresa May’s problems seemed to add up. Over the weekend, the embattled prime minister revealed that the US President advised her to sue the EU. This would have added more tensions in the already tense negotiations. Today, the PM had a setback after an important Tory aide resigned in protest to May’s proposal. The resignation of Scott Mann is an indication of the rough path ahead as May tries to build consensus on her plan in parliament.
In the US, retail sales rose by 0.5%, which was in line with expectations. The increase in retail sales suggests that the economy was robust in the second quarter. They were lead by the purchases of vehicles and other goods. Data for the month of May was revised to 1.3% gain from the previously released 0.8%. May’s retail sales figure was the largest since September last year.
The GBP/USD pair added to the gains started on Friday. Since then, the pair has moved from a low of 1.3100 and is currently trading at 1.3285. This price is close to the 61.8% Fibonacci Retracement level and is in line with the upper band of the Bollinger Bands. The RSI, which is an important oscillator indicator is currently at 72, an indication that the pair could give up some of these gains as bulls take profits. If it does, traders should pay attention to the 1.3230 level.
The USD/JPY pair continued the upward momentum started on April, 9 when the pair reached a multi-month low of 104.65. Since then, the pair has moved higher and is currently trading at 112.31, which is the highest level since January. The price is above the 25 and 50-day moving average with the MACD showing signs of more upward momentum. If the current trend continues, the pair is likely to test the 113.73 resistance level.
The EUR/USD pair rose today and is trading at 1.1710, which is the highest level since Thursday. It rose as the US president travelled to Helsinki to meet with his Russian counterpart. It also rose after a warning from Bundesbank governor on the risks ahead for the German economy. The price is above the 25 and 50-day Simple Moving Average (SMA) and is on an important resistance zone as shown below. If the pair crosses this level going upwards, there is a likelihood that it will move to test the important 1.1757 level.