Japanese yen gains as manufacturing sector makes progress
The Australian dollar rose slightly in overnight trading even after relatively weak PMI data from Australia. According to Markit, Australia’s manufacturing PMI declined from the previous 58.2 in July to 53.9 in August. Other data showed that the services PMI declined from 58.2 to 48.1. This decline showed that the recovery that started in May has started to wane as Australia continues to deal with the second wave of the pandemic. This wave has led to new lockdowns in Victoria and Melbourne states.
The Japanese yen strengthened slightly against the US dollar as investors reacted to mild Japanese consumer inflation data. According to the statistics office, the headline CPI increased from the previous 0.1% to 0.3% on a month-over-month and year-over-year basis. Similarly, the national core rose from -0.2% to 0.0%. Data showed that the manufacturing PMI in the country rose from 45.2 to 46.6 in August. These numbers show that the Japanese economy is on a slow path to recovery.
The British pound rose against the US dollar in overnight trading as traders waited for the outcome of ongoing Brexit talks. The pair also rose ahead of the important retail sales numbers. Analysts expect that the headline retail sales jumped by 2.0% in July after rising by 13.9% the previous month. On a MoM basis, they see the headline CPI rising from the previous -1.6% to 0.1%. Analysts also expect that the core retail sales rose by 1.5% in July. The currency will also react to the flash manufacturing and services PMI data. Other important numbers to watch today will be the Canadian retail sales and US home sales numbers.
The EUR/USD pair rose to an intraday high of 1.1871 in overnight trading. On the four-hour chart, the price is along the 9-day adaptive moving average and slightly below the 25-day exponential moving average. Also, the price is above the ascending trend line that is shown in white, while the Average Directional Movement Index (ADX) has continued to rise. Therefore, the pair is likely to continue rising with the next resistance level at 1.1956.
The GBP/USD pair rose to an intraday high of 1.3232. On the daily chart, the pair has broken out above the bullish pennant pattern that formed a few days ago. It is also above the 78.6% Fibonacci retracement level. The price is above the 25-day and 50-day exponential moving averages. Also, the signal and main line of the MACD are above the neutral line. Therefore, the pair is likely to continue rising as bulls aim for the next resistance of 1.3300.
The USD/JPY pair dropped to an intraday low of 105.65. On the four-hour chart, the price is slightly below the 50-day and 100-day exponential moving averages. The price is above the dots of the Parabolic SAR while the RSI has dropped to 42. The price is also slightly above the 23.6% Fibonacci retracement level. Therefore, it is likely to continue falling as bears aim for the next support at 105.00.