EURO FALLS AS EU GDP UNEXPECTEDLY SLOWS

The Japanese Yen fell against the USD today even after the positive trend in the unemployment rate. The rate declined to 2.3%, which was better than the 2.4% that traders were expecting. This rate was the lowest it has been since May this year. May’s rate was the lowest it has been since 1992. At the same time, the jobs to applications ratio of 1.64, which was better than the expected 1.63. This ratio measures the ratio between job applications and vacancies. It is an important measure of the employment status in the country. The numbers were released a day before the BOJ makes its interest rates decision.

The euro fell against the USD a day after Merkel announced that she will not stand for election in 2021. A number of experts believe that her tenure will not last until then. This is because of the huge losses her coalition suffered in last weekend’s election. In addition to the political news, Germany released worse than expected jobs numbers. While the unemployment rate remained at 5.6%, the unemployment change in October fell by 11K, which was worse than the consensus estimated 12K. In addition, the consumer spending in France declined to minus 1.7%, which was worse than the consensus of minus 0.4%. The Italian economy also stagnated in the third quarter while the EU business climate numbers of 1.01 were lower than the estimated 1.14. The EU’s first reading of the Q3 GDP showed that the economy slowed in the quarter. The GDP grew by 1.7%, which was lower than the expected 1.9% and the second quarter’s 2.2%.

European stocks fell today after the sell-off on Wall Street yesterday. The US markets rose in the first few hours of the trading day. The Dow was up by more than 200 points. These gains were erased after a report emerged saying that the US was prepared to increase tariffs on all imported Chinese goods if talks with Xi will not work out. If this happens, its consequences will be dire as China could announce that it will stop buying US debt. The DAX, CAC, and Stoxx declined by 45, 20, and 10 points respectively.

EUR/USD

The EUR/USD pair declined to an intraday low of 1.1350 after the weak economic data from the European Union. This is as the upward trend started yesterday turned out to be a false breakout. The double EMA indicators continue to show that the pair will continue to move lower. This is also shown by the RSI indicator which is currently at 34. The pair will likely continue to move lower but traders should be cautious about bearish trades below the 1.1300 level.

GBP/USD

The GBP/USD pair declined sharply today, continuing a downward trend started mid-last month when it reached a high of 1.3300. Today, it reached an intraday low of 1.2755. The double EMA and the Bollinger Bands show that the pair could continue moving lower. This is confirmed by the RSI and the MACD, and as shown in the chart below the downward trend has more room to go. However, traders should be cautious about more bearish trades when the pair reaches the important low of 1.2650.

USD/JPY

The USD/JPY pair jumped today ahead of the tomorrow’s BOJ decision. The pair started moving up yesterday when it reached a low of 111.34. Today, it reached a high of 112.900 which was the highest level since Wednesday last week. The current trend will likely continue because there is no major economic news from the US expected today. This is confirmed by the strong momentum as shown below.