Japanese yen falls as October industrial production tanks
The sterling dropped sharply after the markets received mixed mortgage data. The numbers showed that mortgage approvals declined in October from 65.80k to 64.60k. On a positive note, mortgage lending increased from £3.93 billion to £4.32 billion. This was higher than the £3.80 billion that the market was expecting. Net lending to individuals rose from £3.93 billion to £4.32 billion. These numbers came a day after a YouGov poll showed that Boris Johnson and the Tories would win by a landslide in the upcoming election. The poll is one of the most accurate in the United Kingdom. It was the only one that predicted a hung parliament in the previous election.
The euro declined after Eurostat released important CPI and unemployment data. The unemployment rate in the euro area dropped from 7.6% to 7.5%. This was the lowest unemployment rate since July 2008. The unemployment rate in the EU28 remained at 6.3%, which is the lowest level since the start of the EU monthly unemployment data was started. The country with the least unemployment rate was the Czech Republic at 2.2% while Greece and Spain had the highest unemployment rate at 16.7% and 14.2% respectively. Meanwhile, data from Eurostat showed that annual inflation is expected to rise to 1.0% in November. This will be higher than the 0.7% reported in October.
The Japanese yen pared back earlier gains against the USD as the markets continued to react to important data released earlier today. Tokyo headline CPI rose from 0.4% to 0.8% while the core CPI increased from 0.5% to 0.6%. The unemployment rate remained unchanged at 2.4% as the jobs/applicant ratio remained unchanged at 1.57. The preliminary industrial production declined sharply to -4.7% after soaring by 1.7% in September. The market was expecting production to decline by 2.1%. Meanwhile, housing starts declined by -7.4% while household confidence improved from 36.2 to 38.7. Construction orders rose from 36.2 to 38.7.
The USD/JPY pair rose to an intraday high of 109.57. This price is slightly below the weekly high of 109.60. The price is above the 14-day and 28-day moving averages while the RSI has moved to almost 70. The dots of the Parabolic SAR are below the current price, which is a bullish sign. The momentum indicator is slightly below the 100 level. The pair appears to be forming a triple top and there is a likelihood that its price may drop.
The EUR/USD pair declined slightly after mixed economic data from Europe. Nonetheless, the gains were extremely minimal and the pair is trading within a narrow range. The lack of volatility is evidenced by the low average true range (ATR) and the narrow range of the Bollinger Bands. The Envelopes indicator also widened. The pair may break out from the channel in the coming week as the market receives important data and as the final month of the year kicks off.
The GBP/USD pair dropped sharply to a low of 1.2880. This level is slightly below the 38.2% Fibonacci Retracement level. The price is along the lower line of the Bollinger Bands. The RSI has moved from a high of 72 to a low of 38. The pair may continue to remain more volatile as the election vote nears.