Japanese Yen Falls as Shinzo Abe Calls for Fiscal Stimulus

Global stocks were mixed after the market received varied information. On one hand, the market is optimistic about a trade deal between China and the US. On the other hand, some market participants judge US silence on the issue to be a signal that a deal may not happen. In Asia, Chinese stocks declined, with the A50 and Shanghai composite index declining by 70 and 25 points respectively. In Europe, DAX, FTSE, and CAC declined by 35, 20, and 15 points respectively. In the United States, futures were relatively unchanged. Among the biggest movers before the market open were Disney and Gap. Disney stock rose as the company beat on top-line and bottom-line, while Gap tanked after its CEO declined.

The Japanese yen eased slightly against the dollar. This happened after the company reported better-than-expected retail sales. In September, consumer spending rose by 9.5%. This was higher than the consensus estimates of 7.8%. On a MoM basis, spending rose by 5.5% after rising by 2.4% in the previous month. These gains happened ahead of proposed taxes on consumer products. Meanwhile, the country is considering the first economic stimulus since 2016. Shinzo Abe has ordered a stimulus package as the country frets about a global economic slowdown. He is also worried about a hangover from next year’s Tokyo Olympics. 

The euro declined sharply against the USD even as Europe released decent numbers. In Germany, exports jumped by 1.5% while imports rose by 1.3%. The trade surplus increased to EUR 19.2 billion. This was higher than August’s EUR 18.7 billion. This data showed signs that the region was making a recovery after months of declines. The region received a boost after Jean-Claude Juncker said that the US had pledged to not impose tariffs on European cars. Trump has until November 13 to decide whether to impose tariffs on European goods. Trade relations between the United States and the EU has been a bit volatile in recent years. Trump has accused the region of taking advantage of the United States.

EUR/USD

The EUR/USD pair declined to an intraday low of 1.1025. This was the lowest level since October 16. On the four-hour chart, the pair is below the 14-day and 28-day moving averages. It is also slightly above the lower line of the Bollinger Bands. The price is along the 50% Fibonacci Retracement level. The RSI has moved to the oversold level. While the pair may continue moving lower, there is a possibility of a pullback after it completed a 50% retracement.

XBR/USD

The XBR/USD pair continued to decline as traders feared on trade and supply. Yesterday, a report said that OPEC members may decide not to slash output at their December meeting. The XBR/USD pair is trading at 60.87, which is a few pips above the intraday low of 60.63. On the hourly chart, the pair is trading below the 14-day and 28-day moving averages. The RSI and Stochastic Oscillator have moved below the oversold level. The pair may end the day at the current levels.

USD/JPY

The USD/JPY pair declined in the Asian session. It reached a low of 109.14 and then started moving upwards to the current 109.45. On the hourly chart, the pair has been on a strong upward trend since November 1, when it formed a double bottom at 107.90. On the hourly chart, the pair is trading above all the short, medium, and long-term moving averages. The RSI has moved to the overbought level of 30 while the moving average oscillator has been moving upwards. The pair may continue the upward trend in the American session. This could change in the coming week.