Greenback falls after upbeat European construction and retail sales data
Global stocks bounced back today as traders remained optimistic about the recovery of the economy. In China, stocks had their best-day gain in more than a year as the country reported less than ten new cases. Similarly, in Hong Kong, the Hang Seng index rose by almost four percent after upbeat manufacturing PMI numbers. Similarly, in Europe, the DAX index, FTSE 100, and CAC 40 rose by 1.80%, 2.03%, and 1.8%. In the United States, futures tied to the Dow Jones rose by more than 40 points while those tied to the Nasdaq are up by more than 100 points. By rallying, traders seem little concerned about the rising number of coronavirus cases in the United States.
The euro rose against the US dollar as the market reflected on the upbeat retail sales numbers from the Eurozone. According to Eurostat, retail sales rose by 17.8% in June as countries eased movement restrictions. This was the biggest increase ever recorded. It is also higher than the 12.1% decline experienced in May. The sales declined by 5.1% on an annualized basis. Other data showed that investor confidence improved from the previous -24.8 to -18.2. Similarly, construction PMIs and auto sales were better than what most analysts were expecting.
The British pound was little changed against the US dollar as the market reacted to the upbeat construction PMI numbers. According to Markit and CIPS, the construction PMI almost doubled from the previous 28.9 to 55.3. This was the biggest increase in months and the biggest number since July 2018. Similarly, auto sales in the UK showed a slight improvement in June as more people rushed to buy cars. They bought more than 145,000 new cars during the month. Still, auto sales in the first half of the year are almost half where they were in the first half of 2019. Meanwhile, the government launched £1.5 billion of investment in the country’s creative industry sector.
The EUR/USD rose to an intraday high of 1.1300, which is an important psychological level. On the four-hour chart, the pair moved above the upper side of the triangle pattern that has been forming recently. The price is above the 100-day and 50-day EMA and is slightly above the 23.6% Fibonacci retracement level. Also, the signal and histogram of the MACD are above the neutral line. Therefore, the pair is likely to continue rising as bulls target the next resistance level at 1.3100.
The GBP/USD pair was little changed today and is trading at 1.2490. On the four-hour chart, the price has just moved above the 100-day and 50-day EMAs. Like the EUR/USD pair, it has moved above the upper line of the triangle pattern that was forming last week. The Average Directional Index (ADX) has risen to above 40, which means that the pair may continue rising as bears target the next resistance at 1.2500.
The DAX index rose to an intraday high of €12,844, which is close to the highest it has been since February 25. On the daily chart, the index moved above the bullish pennant pattern on Wednesday last week. The price is above the 50-day and 100-day exponential moving averages while the stochastic oscillator has moved above the overbought level. It is also slightly above the 23.6% Fibonacci retracement level. This means that the price may continue rising as bulls target the next resistance at €12,912.