Euro slides as German industrial production declines unexpectedly
Global markets rose today after the first round of talks between the United States and China ended on a positive note. In an interview with CNBC yesterday, trade secretary, Wilbur Ross said that the administration was hopeful of a positive outcome. In a symbolic move, Chinese senior trade representative, vice premier Liu He attended a session of the talks yesterday. The US has demanded serious concessions – with specific dates – from the Chinese. There is a likelihood that the talks will yield results because the status quo means a difficult future for the two countries.
The euro saw some volatility today after weak data from Europe. The business and consumer survey data for December came in at 107.3, which was weaker than the expected 108.2. The business climate number was 0.82, which was lower than the expected 0.99. The same was true for the services and industrial sentiment. In Germany, industrial production declined unexpectedly. The measure declined by 1.9%. This was the third consecutive month of decline. Broadly, Germany is expected to grow slowly as is France, which continues to face the challenge of weekly demonstrations.
On economic data, Switzerland’s unemployment rate for December remained at 2.4%. In the UK, the Halifax house price index rose by 1.3%, which was higher than the consensus estimates of 0.4%. On a MoM basis, the index rose by 2.2%, higher than the estimated 0.5%. In the United States, the NFIB small business optimism for December rose to 104.4 in December from November’s 103.6. In Canada, the trade deficit increased to C$2.06 billion, which was higher than the expected C$1.96 billion.
The EUR/USD pair was slightly volatile today as traders focused on the ongoing negotiations between the United States and China. The pair’s Average True Range indicator rose while its price moved from the upper to lower lines of the Bollinger Bands. In the past few days, the pair has managed to move from a low of 1.1300 to the important resistance level of 1.1485. The pair could remain along these levels as traders decide on next moves.
The USD/CAD continued to decline today, reaching a low of 1.3260. The strength of the Canadian dollar is likely because of rising crude prices and the expectation that the BOC will sound hawkish in the upcoming meeting. On the hourly chart, the pair remains below the important support level as shown below. It is also below the important short-term moving averages. At the same time, the pair’s RSI is moving from the oversold level of 19 and is currently at 25. The pair could attempt to move higher as investors wait for important data from the BOC.
The GBP/USD pair moved lower today as the Brexit debate intensified in the UK. The pair reached a low of 1.2728. On the hourly chart, it is trading below the double exponential moving average and below the fractal adaptive moving average. The RSI has also moved from the overbought level of 70 to the current 41. There is a likelihood that the pair will continue dropping as the RSI attempts to reach the oversold level.