European stocks rise and bonds decline on Lagarde ECB announcement

European stocks rose today after European leaders agreed to nominate Christine Lagarde to be the next European Central Bank (ECB) president. If confirmed, Lagarde will become the first woman leader of the bank. She will also become the first non-economist to lead the bank. Investors expect her to be dovish and likely prolong the era of ultra-low monetary policy. They expect her to continue the policies put in place by Mario Draghi, who is credited for saving the euro in 2012. In response to the decision, the DAX, FTSE, CAC, and Stoxx rose by 0.60%, 0.70%, 0.60%, and 0.80% respectively. The bond market declined, with Germany’s 10-year bond declining to a record low of -0.397%. France’s 10-year bond declined to -0.09%.

The Australian dollar rose today after the country released its trade numbers. In May, the country’s exports rose by 4% while imports rose by 1%. The goods and service surplus reached a record $6.08 billion. Exports increased to $1,442 million, which was a 4% increase while imports increased to $541 million. This data came a day after the RBA slashed interest rates by 25 basis points. It also came as investors are waiting patiently on the ongoing trade negotiations between the US and China.

The USD rose slightly after weak economic numbers were released. ADP released its reading of the nonfarm employment change for June. The number showed that the economy created more than 102k jobs, which was better than the previous 41k but lower than the expected 140k. The trade deficit continued to widen, reaching a high of $55 billion. The deficit widened as US imports increased from $257 billion to $266 billion. Exports in the same month increased from $206 billion to $210 billion. The initial jobless claims increased by 221k, which was worse than the expected 220k. The continuing jobless claims increased to 1,686k. Meanwhile in Canada, the trade surplus increased to $0.76 billion. This was because of an increase in exports and a smaller increase in imports.

EUR/USD

The EUR/USD pair declined after the data from the US. The pair is now trading at the 1.1278 level, which is slightly above the day’s low of 1.1267. On the hourly chart, the pair is along the lower line of the Bollinger Bands. On the hourly chart, the pair is between the 50% and 38.2% Fibonacci Retracement level. The MACD continues to remain on the lower side. The pair is likely to continue to move lower if it breaks the important support of 1.1267.

AUD/USD

The AUD/USD pair rose today to a high of 0.7023. This was a continuation of the upward trend that started on Monday, when the pair tested a low of 0.6955, which was also the 61.8% Fibonacci Retracement level. The pair has moved above the 14-day and 28-day moving averages on the hourly chart. The momentum indicator remains above the 100 level. The pair is likely to continue moving higher to test the previous high of 0.7035.

GBP/CAD

The GBP/CAD pair declined to the lowest level since August 2017. The pair reached a low of 1.6455, as the sterling weakened against the Canadian dollar. On the daily chart, the pair is trading below the 50-day and 100-day moving averages while the RSI remains below the oversold level. The momentum indicator declined to below 100 while the ADX has climbed to 60. The pair is likely to continue declining to test the important support of 0.6400.



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