Asian stocks decline ahead of FOMC rate cut
Sterling continued to decline amid the likelihood of a no-deal Brexit. The British currency is trading at the lowest level since March 27. Over the weekend, it was announced that the Chancellor of the Exchequer was preparing to release GBP 1 billion to help the country prepare for a no-deal Brexit, which he called a “very real prospect”. At the same time, Tory members of Parliament opposing a no-deal Brexit are stepping up their preparations to try and prevent the country from exiting without a deal.
Asian stocks moved slightly lower ahead of what will be the busiest week for global markets. On Wednesday, the Federal Reserve is expected to make a pivotal interest rates cut in response to the challenging state of the global economy. On Friday, data from the US showed that the economy expanded by 2.1%, which was below the 3.2% recorded in the previous quarter. Two days after the Fed makes its interest rates decision, the Labor Department will release employment data for the month of July.
Today, the market received retail sales data from Japan. The numbers showed that the retail sales rose by 0.5% in June, which was lower than the previous month’s 1.3%. Later today, the market will receive the house price index in the United Kingdom. They will also receive the BOE consumer credit data, mortgage approvals and mortgage lending. From Spain, they will receive the consumer price index while from Italy, they will receive the PPI.
The GBP/USD pair declined to a low of 1.2368, which is the lowest level since March 2017. On the daily chart, this price is below the 21-day and 42-day moving averages while the RSI has moved to a low of 21. The price is along the lower line of the Bollinger Bands while the stochastic indicator is in the oversold level. The pair will likely continue moving lower ahead of the FOMC decision.
The EUR/USD pair was little moved ahead of the busy market week. The pair is trading at 1.1130, which is a few pips above the lowest level since May this year. On the four-hour chart, the pair is trading below the 21-day and 42-day moving averages. The accumulation/distribution indicator has continued to move lower while the money flow index has moved slightly upwards. The pair will likely remain in this holding pattern ahead of the FOMC decision.
The USD/JPY pair declined after Japan released its retail sales data. The pair reached a low of 108.40 and then moved slightly above to the current level of 108.50. On the hourly chart, the pair is trading along the 42-day moving averages and slightly lower than the 21-day EMA. The pair will likely remain along these levels ahead of the FOMC decision.