US dollar rises ahead of Powell testimony to Congress
US and Asian stocks rose in overnight trading. The Dow and the S&P500 rose by 180 and 25 points respectively. In Asia-Pacific, China A50 and ASX200 rose by 180 and 40 points respectively. This is as the coronavirus epidemic continues to spread. Overnight, it was reported that the death toll had climbed to more than 1,000 as the number of cases rose to almost 43k. This has become one of the worst epidemics in modern times. It has led to the closure of many plants in China, which could have a negative impact on the global economy.
Sterling was relatively unmoved today as the market prepared for the release of important economic data from the Office of National Statistics (ONS). The industrial production is expected to have improved slightly in December. It is expected to have declined by 0.8% after declining by 1.6% in the previous month. On a MoM basis, the industrial production is expected to improve from -1.2% to 0.3%. The manufacturing production is expected to have increased from -1.7% to 0.5%. The GDP is expected to have remained unchanged at 0.4%. These numbers come as the UK starts to negotiate a lasting trade deal with the European Union.
The US dollar rose slightly as the market prepared to listen to Jerome Powell. The Fed chair will be testifying in Congress today and tomorrow. His testimonies are usually followed closely because they provide a guidance on the future plans of the bank. This testimony comes at a time when the bank is facing a crisis it did not project in the December and January monetary policy meetings. In the previous meetings, the threat of coronavirus was not all that widespread. Some analysts expect the bank to cut interest rates once this year.
The EUR/USD pair declined to a low of 1.0913, which is the lowest level since September last year. The price is below the 14-day and 28-day exponential moving averages. The RSI has moved to the oversold level of 30. The DeMarker indicator remains below the oversold level of 0.3. The pair may continue moving lower. However, there is also a possibility that the pair may be close to bottoming.
The GBP/USD pair was relatively unmoved as the market waited for important GDP, industrial and manufacturing production data. The price is along the 14-day and 28-day EMA. The pair appears to be making a symmetrical triangle pattern. The average true range has declined, which is a signal of low volatility. The pair may have a significant breakout after the GDP, manufacturing, industrial and trade data is released.
The USD/CHF pair rose to an intraday high of 0.9782. This is its highest level since December 27. The pair is above the 14-day and 28-day exponential moving averages. The RSI rose and is nearing the overbought level of 70. The signal and histogram of the MACD are slightly above the neutral line. The pair may continue moving upwards.