USD in holding pattern ahead of Fed, jobs and GDP data
Japan retail sales jumped sharply in September, a month before a consumption tax came into force. The tax increased from 8% to 10% and is intended to help reduce the deficit and boost social spending. During the month, retail sales rose by 9.1%, which was the biggest jump in more than five years. It was above the consensus estimates of 6.9% and August’s 1.8%. This spending growth is unlikely to grow. Recent data showed that spending in the country’s supermarkets has plunged. According to Nowcast, supermarket sales declined by between 10% and 20% in the first week of October. Tomorrow, the market will receive the BOJ interest rates decision.
The Australian dollar declined slightly after the statistics office released its CPI data for the third quarter. In the quarter, headline CPI rose by 1.7% as was expected. This was slightly higher than the previous rise of 1.6%. On a QoQ basis, the CPI rose by 0.5%. Weighted mean CPI remained unchanged at 1.2% while the trimmed mean CPI rose by 1.6%. In the third quarter, the Australian central bank slashed rates 2 times. It also sounded optimistic about the recovery. Tomorrow, the market will receive manufacturing PMI data from China. This number is watched closely in Australia because the country exports most of its goods there. Indeed, Australia has never gone to a recession in the past 28 years because of its trade relationship in China.
Later today, the market will receive important information including the employment numbers from Germany. The unemployment rate is expected to remain unchanged at 5.0%. The unemployment change is expected to increase by 2k. German CPI for October is expected to decline from 1.2% to 1.1%. In the European Union, consumer confidence in October is expected to remain unchanged at -7.6 while services sentiment is expected to decline slightly to 9.3.
In the United States, ADP will release its reading of private nonfarm payrolls. The commerce department will release the first reading of the third quarter GDP. Market participants expect the GDP to decline from 2.0% to 1.6%. Later on, the Federal Reserve is expected to slash interest rates again by 25 basis points. In Canada, the central bank is expected to leave rates unchanged at 1.75%.
EUR/USD rose in the American session and remained unchanged in the Asian session. On the hourly chart, the price is along the 61.8% Fibonacci Retracement. The price is along the 14-day and slightly higher than the 28-day moving averages. The pair may stay at the current levels ahead of the release of US GDP data and Fed interest rates.
AUD/USD pair moved slightly lower after the release of CPI data for October. The pair moved from a double top level of 0.6870 to a low of 0.6855. On the 30-minute chart, its low was along the 61.8% Fibonacci Retracement level. The price is along the short and medium-term moving averages. The average true range indicator has moved higher, which is a sign of increased volatility. The pair will likely remain at the current level ahead of US GDP, job numbers, and Fed rates decision.
The USD/JPY pair was unchanged today after the release of retail sales from Japan. The pair is trading at 108.84, which is along the middle line of the Bollinger Bands. The RSI has remained a bit neutral at the current level of 45. The momentum indicator has dropped below 100. The pair will likely move in reaction to important data from the US.