YEN FALLS AFTER WEAK BANK LENDING AND MACHINERY ORDER DATA
The US markets moved higher yesterday after the Midterm election results were announced. As predicted, Republicans took control of the House while Democrats took control of the Senate. In a post-election press conference, Donald Trump signaled that he will seek to work with the Democrats. However, analysts expect increasing conflicts in the days to come.
The price of crude oil dropped sharply yesterday after the Energy Information Administration (EIA) released inventory data. The data showed that the inventories were higher than what most traders were expecting. In the past week, inventories rose to 5.783 million barrels, which was higher than the 2.433 million barrels that traders were expecting. This data came hours after API released the inventory numbers of 7.83 million barrels. The inventories have been increasing in the past weeks as companies prepared to fill the gap left by Iran.
Japanese yen declined in the Asian session after disappointing data from Japan. In October, bank lending rose by an annualized rate of2.2%, which was higher than the consensus estimate of 2.4%. Bank lending is important because it is an indicator of consumer spending and investments. Core machinery orders declined by an annualized rate of minus 7.0% - which was lower than the gain of 7.7% that traders were expecting and the lowest level it has been since September last year. As a major industrial country, a decline in machinery orders is a good indicator of business performance.
Today, a number of economic data will be released that will impact the market. China will release its monthly trade data. In the US, the Federal Reserve will release the interest rates decision. While it is not expected to make adjustments, the bank will send signals about its future pace of hikes. The European Union will release the economic forecasts. In the US, the Department of Agriculture will release the World Agricultural Supply and Demand Estimates (WASDE) report. This will lead to major movements in the agricultural crops sector.
The EUR/USD pair declined in the Asian session ahead of the Fed decision. It reached an intraday low of 1.1425. The pair’s price is slightly below the 50% Fibonacci Retracement level. The moving average oscillator has eased the declines while the momentum indicator shows little downward momentum. Therefore, there is a likelihood that the pair will remain unchanged today ahead of the Fed decision.
The USD/JPY pair rose in the Asian session after weak economic data from Japan. It is now trading at 113.67, which is the highest level since yesterday morning. The Average True Range indicator has fallen to 0.21, which is an indicator that the pair’s volatility is easing. The RSI indicator is at 67, which is a bullish sign while the MACD is sending bullish signals in the hourly chart. Therefore, there is a possibility that the pair will continue the upward trend ahead of the data from the Fed.
The price of Brent dropped sharply yesterday after the inventories data. It reached a low of $71.35, which was the lowest level since Tuesday. Overnight, the XBR/USD pair rose slightly to 72. On the four-hour chart, the pair’s Relative Strength Index has risen from a low of 23 to the current 43. The Bears Power strength has weakened while the ADX is currently at 17. This data show that the pair has likely found a floor and that it could move higher.