Yen rises as Yoshihide Suga becomes Japan’s next PM
Global stocks rose today as investors reacted to a series of corporate events. Over the weekend, Softbank announced its decision to sell Arm, the UK chip-maker, to Nvidia in a deal worth more than $40 billion. In the United States, Gilead Sciences announced that it would acquire Immunomedics in a deal valued at more than $21 billion. Also, Caledonia, an Australian asset manager, acquired Scientific Games, an American company. In other news, TikTok selected Oracle as its American technology partner. As a result, the DAX index, FTSE 100, and CAC 40 rose by more than 0.20% while in the US, futures tied to the Dow Jones and S&P 500 rose by 0.82% and 1.06%, respectively.
The Japanese yen gained against the US dollar as traders reacted to new leadership change in Japan. Yoshihide Suga won his party’s election to replace Shinzo Abe who announced his resignation two weeks ago. The currency also reacted to relatively strong industrial production data from the country. According to the statistics office, production increased by 8.7% in July, extending the 1.9% gains it made in the previous month. That increase was better than the 8.0% that analysts were expecting. In the same month, capacity utilization rose by 9.6%.
The euro extended its bullish run against the US dollar as investors focused on the upcoming Fed meeting and the better industrial production data from Europe. According to Eurostat, the Euro zone's industrial production increased by 4.1% in July, outperforming the 4.0% that analysts were expecting. Production fell by 7.7% on an annualised basis. The market is also reflecting on the ECB monetary policy meeting held last week and the upcoming rate decision by the Federal Reserve. Like the ECB, analysts expect the Fed will leave its interest rate unchanged on Thursday.
The EUR/USD pair rose to an intraday high of 1.1875. On the four-hour chart, the price is above the support line of the ascending white channel shown in white. It is also above the 50-day and 100-day moving averages. The price is also slightly below the upper line of the Bollinger Bands while the money flow index is slightly below the overbought level of 80. Therefore, the price is likely to continue rising as bulls aim for the important resistance at 1.1900.
The USD/JPY pair declined today as traders reacted to the new leadership change in Japan. The pair is trading at 105.92, which is the lowest it has been since September 9. On the four-hour chart, the price is below the descending white trendline and between the 50% and 38.2% Fibonacci retracement level. It is also slightly below the 50-day and 100-day moving averages. Therefore, the pair is likely to continue falling as bears target the next resistance at 105.80.
The GBP/USD pair is up slightly at 1.2872, which is above Friday’s low of 1.2767. On the four-hour chart, the price is below the 50-day and 100-day exponential moving averages. The RSI has moved above the oversold level of 30 while the signal and main lines of the MACD have started making a bullish crossover. Therefore, while the trend remains to be bearish, the price is likely to rise during the American session.