Wall Street rallied yesterday as traders reacted to the signing of the phase one of the US and China trade deal. The document, which has eight parts acts as a cease-fire in a two-year trade war that has been blamed for slowing the world economy. The deal will see China open up its market, buy more goods from the United States, and provide increased protections to trade secrets. The next phase of the deal will be more complex and involve things like Chinese subsidiaries to companies and the government’s role of state-owned firms.
The Japanese yen was relatively unchanged after machinery orders and PPI data were released. The country’s core machinery orders rose by 18.0% in November. This was the highest rate of growth since 2014. It was higher than the consensus estimates of 3.2%. The orders rose by an annualised rate of 5.3%, which was highest growth rate since August last year. Meanwhile, producer prices rose by a MoM and YoY rate of 0.1% and 0.9% respectively.
The earnings calendar will continue today. Companies to watch will be The Bank of New York Mellon, Morgan Stanley, PPG Industries, CSX and Jefferies. These will come a day after the market received results from companies like Goldman Sachs and Blackrock. Traders will also receive important data from the United States. The Labour Department will release the initial jobless claims for the past week. The department will also release the export and import price index while the Census Bureau will release the retail sales for December. This data will come a day after Target announced that it had missed its holiday sales goals. Meanwhile, the Philadelphia Fed will release the manufacturing index for January.
EUR/USD
The EUR/USD pair rose from an intraday low of 1.1122 to a high of 1.1162 in the American session. The 1.1162 was the 50% Fibonacci Retracement level on the hourly chart. The pair was unchanged during the Asian session. The price is slightly above the 14-day and 28-day EMA while the dots of the Parabolic SAR are below the current price. The pair will likely continue trending higher although this could change depending on the strength or weakness of US data.
AUS200
The AUS200 index rose today in reaction to the new détente between the US and China. The index reached a high of $7,050, which is its highest level ever. The price is above all the short and medium-term moving averages. The momentum indicator has continued to rise while the relative strength index has risen above the overbought level of 70. The index may continue to rise as trade tensions ease.
USD/CHF
The USD/CHF pair declined slightly during the American session. The pair briefly dropped below the important support of 0.9645. It then moved to this support during the Asian session. The price is along the 14-day moving averages and slightly lower than the 28-day EMA. The pair will likely remain at the current support level ahead of important US data.
