Global stocks jumped even as the International Monetary Fund (IMF) warned of a slow-down in international growth. The global body said that global growth could slow to its lowest rate since the 2008/9 financial crisis. It blamed this on the ongoing trade war between US and China and the smaller one between Japan and South Korea. In the report, the IMF called for Donald Trump to cease hostilities with China and other countries. This report came a few days after the US and China announced a partial deal. Later today, traders will continue to focus on corporate earnings. Key companies to watch today will be Bank of America, Abbott Labs, Bank of New York Mellon, PNC Financial, Alcoa, IBM, and Netflix.
The New Zealand dollar declined sharply in the Asian session after the release of inflation numbers. Data from Statistics New Zealand showed that consumer prices rose by 1.5% in September. This was influenced by higher prices of rent, cigarettes, and tobacco. It was offset by declining prices of vegetables, petroleum products, and telecommunication equipment. The report found that the cost of running a household was increasing. Today’s decline of the Kiwi was a continuation of the trend that started on Monday this week.
Sterling jumped after sources told the media about the progress of the ongoing talks. A statement by Bloomberg and widely shared in the media said that negotiators were closing in on a deal. Progress on this deal hinged on whether Boris Johnson could secure support from the members of parliament. Most importantly, he wants support from members of the Northern Irish Democratic Unionist Party. The negotiators are expected to submit a legal text to EU governments today. If the two sides hammer a deal, Johnson will put it to the house of commons on Saturday. This will see him avoid asking the EU for an extension. Later today, the market will receive the CPI data from the UK.
The European Union will release its CPI data for September. The market expects headline CPI to decline from 1.0% to 0.9% while the core CPI is expected to remain unchanged at 1.0%. Traders will receive retail sales data from the US. Core retail sales are expected to increase by 0.2%. Meanwhile, Canada will receive its CPI data for September. Headline CPI is expected to increase slightly to 2.0% while core CPI is expected to remain unchanged at 1.9%.
Cable rose sharply to a high of 1.2797, which was the highest level since June this year. On the daily chart, this price was between the 50% and 61.8% Fibonacci Retracement level. The price is also above the 14-day and 28-day EMA. The RSI has moved to the overbought level. The same is true with the average true range, which is usually seen as a measure of volatility. Today, the pair may see increased volatility depending on what news comes from Brussels and London.
EUR/USD pair was little changed in the Asian session as traders waited for more information on Brexit. The pair was trading at 1.1030, which is along the tip of the previous symmetrical triangle. On the hourly chart, the price is along the 14-day and 28-day moving averages while volumes have declined. Today, the key levels to watch will be the important support of 1.1000 and the resistance level of 1.1062.
NZD/USD pair declined sharply after the CPI data from New Zealand. The pair declined to a low of 0.6270. On the hourly chart, the price is slightly below the 50% Fibonacci Retracement level. It is also below the 28-day and 14-day EMAs. The RSI and the accumulation/distribution indicators have been on a downward trend. The pair’s movements today may depend on the US retail sales data. If it continues to move lower, the pair may test 0.6260, which is the 38.2% Fibonacci level.