Yen unchanged as Japan Q3 economy declines faster than expected
The Dow Jones Industrial Average rose yesterday as the market reacted to Jerome Powell’s testimony to congress. In his testimony, Powell said that he saw no need for the bank to cut interest rates again. This is after the bank made three rate cuts this year. Two weeks ago, the bank cut interest rates to a range of 1.5% and 1.75%. The market also reacted to news that Disney+, the new subscription product from Netflix had added more than 10 million users in the first day. This was more than what the market was expecting. Also, the market reacted to a Wall Street Journal (WSJ) report that tempered the mood on trade. The report said that Beijing was resisting commitment on specific purchases, tech-transfer, and enforcement mechanisms.
The Japanese yen was unchanged after the country released important data for the third quarter. In the quarter, the economy expanded by an annualized rate of 0.2%. This was below the consensus estimates of about 0.8%. It was also lower than the second quarter’s growth of 1.8%. On a QoQ basis, the economy expanded by 0.1%. This was lower than the second quarter growth of 0.4%. Private consumption rose by 0.4%, which was lower than 0.6%. External demand declined by -0.2% while capital expenditure increased by 0.9%. This weak growth comes ahead of a proposed tax hike. Last week, Japan’s prime minister Abe ordered more stimulus to boost the economy.
The Australian dollar dropped after important data from the country and China. Data showed that the Australia’s employment situation got worse in October. The unemployment rate rose from 5.2% to 5.3%. Participation rate dropped from 66.1% to 66% while more than 19k people lost their jobs. Meanwhile, in China, data showed that retail sales dropped from 7.8% to 7.2%. Industrial production declined from 5.8% to 4.7% while fixed asset investment declined from 5.4% to 5.2%. The unemployment rate dropped from 5.2% to 5.1%. Later today, the market will receive GDP data from Germany and the European Union. The market will also receive CPI data from Spain and PPI data from the US.
The AUD/USD pair dropped to a low of 0.6796. This was the lowest level since October 17. On the four-hour chart, the price is along the 50% Fibonacci Retracement level. The pair was slightly above the 14-day and 28-day moving averages. The RSI has moved to below the oversold level of 30. The momentum indicator remained below 100. The pair may continue to decline as sentiment on trade also falls.
The EUR/USD pair declined slightly after the Jerome Powell speech. The pair is now trading at 1.1000, which is slightly above the 38.2% Fibonacci retracement level. The price is trading slightly above the lower line of the Bollinger Bands, while the price has remained slightly above the oversold level of 30. The signal and main lines of the Stochastic Oscillator have remained below the oversold level. The pair may continue to decline today in a continuation of this trend.
The USD/JPY pair was relatively unchanged even after weak economic data from Japan. The pair is trading at 108.80. On the hourly chart, this price is slightly above this week’s low of 108.64. The price is also between the 50% and 61.8% Fibonacci Retracement level. The price is also between the 50% and 61.8% Fibonacci Retracement level. The pair is also trading between the channel shown in orange. The pair may move slightly higher today, but the downward trend may continue in the near term.