Wall Street soars as investors brace for weaker monetary policy
Wall Street ended the day at record highs as investors cheered the prospect of a weaker monetary policy among the world’s largest banks. The S&P 500 ended the day 5 points below the important psychologically-important level of $3,000. The rally in US stocks also continued in the Asian session, where the Hang Seng and Nikkei rose by 22 and 26 points respectively. With the US markets closed today, the rally in US stocks will determine on the jobs numbers that will be released tomorrow. In a preview, data from ADP showed that the US private companies added 102k jobs in June.
The US dollar was relatively unmoved after ADP released its reading on US employment in June. The initial jobless claims rose by 221k while the continuing jobless claims increased to 1,686k. In June, exports increased to $210k while imports increased to $266k, leading the trade deficit to widen by more than $55 billion. This is a testament of how hard it is for the US to reduce its deficit. The ISM non-manufacturing PMI declined to 55.1 from the previous 56.9 while factory orders declined by -0.7%. The non-manufacturing business activity dropped to 58.2 from the previous 61.2. Weak data from the US show that the country is getting bruised in the ongoing trade conflict.
The price of crude oil moved lower as investors focused on the crude oil inventories data from the US. Yesterday, data from the EIA showed that the inventories declined by more than 1.085 million barrels. This was a slight decline compared to the previous week’s 12.78 million barrels. It was also lower than the 2.96 million barrels that traders were expecting. Meanwhile, gasoline inventories declined by 1.58 million barrels while the national gas storage increased to 89B. These numbers came after the OPEC+ cartel agreed to extend the limits on production.
The EUR/USD pair was relatively unchanged in the Asian session and is now trading at the 1.1283 level. The price is between the 50% and 38.2% Fibonacci Retracement level and along the middle line of the Bollinger Bands. The accumulation/distribution indicator has been moving lower. With no major economic data expected today, and with the US markets closed, the pair could remain in the holding pattern ahead of the US jobs numbers expected tomorrow.
The USD/JPY pair was relatively unchanged in the Asian session. It is now trading at 107.76, which is along the 50% Fibonacci Retracement level. The price is also below the 25-day and 50-day moving averages while the on balance volume has been moving lower. With the pair consolidating, it is likely that it will break out in either direction after the US data is released.
The XBR/USD pair declined to a low of 63.20 after the US inventories data. On the hourly chart, the pair is trading slightly above the 50% Fibonacci Retracement level. It is along the middle line of the Bollinger Bands while the moving average oscillator has moved slightly lower. The pair is likely to continue moving lower to test the 61.8% Fibonacci Retracement level of 61.90.