Euro rises after ECB leaves interest rates and QE unchanged
The euro rose as traders reacted to the statement by the European Central Bank (ECB). In its decision, the bank left the deposit facility rate unchanged at -0.50%, the interest rate at 0.0%, and the marginal lending facility unchanged at 0.25%. This is in line with what analysts polled by Reuters were expecting. The bank also left the quantitative easing program intact at €1.35 trillion. This rate decision came at a time when the euro has soared and the European economy is making a slow recovery. Earlier today, data showed that Italy’s industrial production rose by 7.4% in July while Sweden’s consumer inflation rose to 0.8% in August.
The Japanese yen declined slightly as traders reacted to the positive machinery orders from Japan. According to the Ministry of Finance, the core machinery orders rose by 6.3% in the previous month. That was better than the 1.6% increase that analysts were expecting. It was also better than the previous month’s decline of 7.6%. Still, the orders were 16.2% lower than where they were a year ago. Other data showed that foreign buying of Japan’s bonds increased to ¥377 billion in August from a decline of ¥177 billion in the previous month. Also, foreign investors bought stocks worth more than ¥11.6 billion during the month.
The US dollar weakened slightly as traders reacted to the positive unemployment claims data. According to the Bureau of Labour Statistics, more than 884k Americans signed for jobless claims in the previous week. That number was in line with the 884K that the bureau released last week and better than the 850k that analysts were expecting. Further data showed that the headline producer price index rose by 0.3% in August after rising by 0.6% in the previous month. The core PPI, which excludes the volatile food and energy products, rose by 0.4% after rising by 0.5% in the previous month.
The GBP/USD pair rose to an intraday high of 1.3020, which is higher than yesterday’s low of 1.2890. The daily chart shows that the pair formed a hammer candlestick pattern yesterday. This pattern usually sends a signal that an asset will have a bullish reversal. In addition, the Elliot wave pattern shows that the price has started its fifth stage of the pattern. This means that the price is likely to continue rising as bulls aim for the YTD high of 1.3480.
The USD/JPY pair declined slightly as traders reacted to Japan’s machine tools data. The pair is trading at 106.08, which is along the 50-day and 100-day exponential moving averages. On the four-hour chart, the price is slightly below the 38.2% Fibonacci retracement level. It is also below the white triangle pattern. Therefore, the price is likely to remain in this consolidation in the near term.
The EUR/USD pair rose slightly before and after the ECB delivered its rate decision. The pair is trading at 1.1837, which is above this week’s low of 1.1750. On the four-hour chart, the pair has re-entered the ascending white channel. It has also moved slightly above the 50-day and 25-day moving averages, which is a bullish sign. Therefore, there is a likelihood that the pair will continue rising as bulls aim for the next resistance at 1.1900.