FTSE 100 RALLIES AS BIDDING WAR FOR MORRISONS INTENSIFIES

UK stocks rallied as investors cheered the new bidding war for the country’s fourth-biggest supermarket chain. Two weeks ago, Morrisons turned down an offer by Clayton Dubilier & Rice (CDR), an American private equity firm. During the weekend, the firm announced that it would accept a separate bid by a consortium of Fortress, Koch Industries, and the biggest Canadian pension fund. According to media reports, other private equity companies like Apollo Global Management could place bids for the company. Analysts believe that other UK companies could become acquisition targets because of their relatively cheap valuations. The FTSE 100 rose by 0.15%.

The British pound rallied today after the latest services and composite PMI numbers from the UK. According to Markit, the services PMI declined from 62.9 in May to 62.4 in June while the composite PMI fell from 62.9 to 62.2. The two numbers were better than the median estimate of 61.7. These numbers are important since the services sector is the most important one in the UK. The currency also rallied after Boris Johnson committed to push forward with the country’s reopening on July 19th. Further data showed that the country’s new car sales rose by 28% in June even as the chip shortage persisted.

The Australian dollar rose after the relatively strong services PMI numbers from the country. The data showed that the services PMI declined from 58.0 in May to 56.8 in June. The data came as the Reserve Bank of Australia (RBA) started its monetary policy meeting. The bank is expected to leave interest rates unchanged. Still, investors will focus on the bank’s statement on quantitative easing (QE) and yield curve control. Some believe that the bank will continue with the current pace of asset purchases while others expect that it will slow them down.

AUDUSD

The AUDUSD pair rose to an intraday high of 0.7536 ahead of the RBA decision. On the four-hour chart, the pair moved above the 25-day and 15-day moving averages. It has also tested the descending trendline that is shown in red while the signal and main lines of the MACD have moved below the neutral line. Therefore, the pair will likely resume the downward trend ahead of the RBA decision.

EURUSD

The EURUSD pair rose after the relatively strong Eurozone services PMI data. On the four-hour chart, the pair approached the 61.8% Fibonacci retracement level. The signal line of the MACD and the Relative Strength Index (RSI) have kept rising. It has also moved above the important resistance level at 1.1847, which was the lowest level on June 18. Therefore, the pair will likely keep rising as bulls target the next key resistance at 1.1950.

GBPUSD

The GBPUSD pair rose after the relatively strong UK PMI numbers. On the four-hour chart, the pair has moved above the 25-day and 15-day moving averages. Like in the EURUSD and AUDUSD pairs, the MACD and Relative Strength Index (RSI) have also risen. It has also moved above the important resistance at 1.3785. Therefore, the pair will likely keep rising, with the next key reference level being at 1.3900.



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