Asians stocks rose as the markets reacted to trade developments. Last week, the US and China confirmed that the two sides had reached the first phase of the trade deal in principle. The new deal has several parts. China will be required to increase its purchases of American farm products. It will also be required to be more open to American firms and take more measures to prevent stolen intellectual property. The US will be required to lower some of its existing tariffs. The country did not implement the tariffs that were to go into effect on Sunday.
There was optimism in the market after China released positive data earlier today. The country released the closely watched fixed-asset investments and retail sales data. The fixed asset investments remained unchanged at 5.2% in November while industrial production jumped from 4.7% to 6.2%. Meanwhile, retail sales rose from 7.2% to 8.0% while the unemployment rate remained unchanged at 5.1%. These numbers show that the Chinese economy is finishing strong even with the trade war. These numbers came two days after the US released retail sales data for November. Retail sales rose 0.2% in November, which was lower than the consensus estimates of 0.5%.
The market will focus on the flash PMI data from Markit. In Australia, the flash manufacturing and services PMI declined from 49.9 to 49.4 while the services PMI declined from 49.7 to 49.5. In Japan, the manufacturing PMI declined from 48.9 to 48.8. The market expects the German manufacturing PMI to increase from 44.1 to 44.5. The services PMI is expected to increase slightly from 51.7 to 52.0. The market will also receive flash PMI data from the European Union, the United Kingdom, and the United States.
EUR/USD
The EUR/USD pair declined sharply on Friday. It dropped from a high of 1.1200 to a low of 1.1110. The pair rose slightly and is trading at 1.1130 as the market waits for PMI data. The price is slightly below the 14-day and 28-day moving averages while the RSI has moved up slightly to 45.03. Volumes have slowed as shown on the hourly chart. The pair may resume moving lower to test the 50% Fibonacci Retracement level of 1.1090.
GBP/USD
The GBP/USD pair rose to a high of 1.3515 on Friday. This happened after the resounding victory by Boris Johnson and the Conservative party. The pair then declined to a low of 1.3305. Today, the pair rose slightly to a high of 1.3395. The price is slightly above the 14-day and 28-day moving averages while the RSI has moved to 60. The pair may retest Friday’s high of 1.3515 today.
AUS200
Australian stocks rose sharply today on positive data from China. The AUS200 index rose to a high of $6862.6, which is along the upper line of the Bollinger Bands. The RSI has moved to a high of 84 while the momentum indicator has moved to its highest level in months. The price is also above the short, medium, and long-term moving averages. The index may continue to move higher to retest the previous high of $6900.
