Japanese yen gains after weak CPI data from Tokyo
US and Asian stocks declined in overnight trading as traders reacted to reports that the Trump administration had engaged in a cover up. According to a whistleblower, the White House had used a classified storage system to hide details of the call between Donald Trump and his Ukrainian counterpart. It is this call that has led to a start of impeachment proceedings against the President. Traders fear that ongoing political uncertainty means that nothing will be achieved in the coming year. In Japan, the Topix index declined by 1.8% while in Hong Kong, the Hang Seng index declined by 0.7%. The S&P 500 ended the day down by 0.2%.
The Japanese yen strengthened slightly against the USD even after weak CPI data from Tokyo. In September, the headline CPI in Tokyo rose by 0.4%, which was slightly lower than August’s 0.6%. Traders were expecting the CPI to rise slightly to 0.8%. The Tokyo CPI rose by 0.5%, which was lower than the consensus estimates of 0.7%. The market watches inflation in Tokyo because that is where most people live in Japan. Meanwhile, in China, industrial profits declined by 2% in August. YTD, profits have declined by 1.7%.
Later today. Traders will receive the import price index for August from Germany. The index is expected to have declined by -2.6% in August. From the EU, they will receive the business climate, consumer confidence, consumer inflation expectations, industrial and service sentiment from the European Union. From the United States, the market will receive the durable goods orders for August, the core PCE index, personal income and spending, and consumer sentiment from Michigan University. Meanwhile, the US and China will restart talks on October 10.
The EUR/USD pair has been on a downward trend. In overnight trading, the pair reached a low of 1.0900. This was the lowest level since May 2017. On the daily chart, the price is below the 14-day and 28-day moving averages. The average directional index has soared to a high of 49 while the momentum indicator has continued to move lower. The pair will likely move lower still as it continues with the current trend.
The BTC/USD pair has had a tough week. After months of consolidation, the price of Bitcoin declined sharply this week to a low of 7700. On the four-hour chart below, the price is trading at 8018, which is below the 14-day and 28-day moving averages. The RSI continues to remain below the oversold level of 30. The money flow index has risen slightly and is currently at 30. The pair will likely continue to move lower as sentiment changes.
The USD/JPY pair declined slightly to 107.66. On the hourly chart, the pair is trading at the 50% Fibonacci Retracement level. The price is also along the 28-day and 14-day moving averages. The pair has also made a symmetrical triangle pattern. This implies that the pair could see a big breakout as the third quarter ends.