Australian and Asian stocks rose after a busy weekend for the markets. On Friday, the Department of Defence (DOD) reported that Microsoft had won the $10 billion cloud contract. This was a big news as IT companies like Amazon, IBM, and Oracle continue to seek domination in the industry. A research note by Wedbush on Saturday said that the deal alone would likely add $10 on Microsoft’s stock price. Another big corporate news item was that LVMH had approached Tiffany with a $120 per share offer. Meanwhile, General Motors employees agreed to return to work after a 40+ day strike. This week, the market will see the impact of the strike when the company releases its data.
AUS200. AUS200 moved up slightly after falling sharply on Friday. The index is trading at $6752, which is slightly higher than Friday’s close of $6748. This price is slightly lower than the important support of $6760. On the hourly chart, the index is along the 14-day and 28-day moving averages while RSI has dropped from the overbought level of 70 to the current 45. The index may continue moving higher past this pullback.
Euro. Euro declined against the USD as the market continued to react to flash manufacturing data and the ECB decision. Yesterday, data from the region showed that manufacturing and services were contracting. In Germany, flash manufacturing PMI declined to 41.9 from the previous 41.7. Services PMI declined from 51.4 to 51.2. In the EU area, manufacturing PMI remained unchanged at 45.7 while services PMI increased slightly to 51.8. Meanwhile, Mario Draghi left rates unchanged as was widely expected. This was his last monetary policy meeting. Today, traders will receive survey data on the EU economy’s health.
EUR/SEK. The EUR/SEK pair declined sharply yesterday to a low of 10.6485 after the rates decision. The pair then formed a bullish engulfing pattern and its price has recovered to the current 10.7280. On the hourly chart, the short and medium-term EMAs have made a bullish crossover while the signal line of MACD has moved above the neutral line. Today, the pair may move in reaction to German survey data and Sweden’s retail sales.
British pound. Sterling declined as uncertainty over Brexit grew. This was after Boris Johnson announced that he would table a parliamentary motion calling for a general election on December 12. As the prime minister, Johnson does not have the unilateral power to call for an election. To achieve his goal, he must secure a supermajority in parliament. This means that the input of the opposition party will be important. Labour’s Jeremy Corbyn has said that he will only support a general election if no-deal is off the table.
GBP/JPY. The GBP/JPY cross declined yesterday after the election announcement. It reached a low of 138.88. This was below last week’s high of 141.50. The pair is trading along the 14-day and 28-day moving averages while the RSI is neutral. The signal and histogram of the MACD has been unmoved as well. It could move sharply in either direction depending on the conditions put in place by the European Union when it gives a new extension.
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