US DOLLAR FALLS ACROSS THE BOARD AS TREASURY YIELDS EASE
The US dollar fell across the board as treasury yields eased. The dollar index dropped by 10 basis points in the Asian session with losses spread across the board. The biggest gainer was sterling, which jumped after fresh hopes of a new Brexit deal between the United Kingdom and the European Union. The euro also jumped following Brexit news. A deal is expected to be announced as soon as Monday next week.
The Japanese yen strengthened against the US dollar in the Asian session. This was a continuation of the trend that started on Thursday last week when the pair hit a high of 114.53. This was the highest level in more than one year and was an important resistance level. Today’s gains on the yen came as the country released data that showed improved machinery orders. The sales of machinery rose by an annualized rate of 12.6%. This was higher than the 1.6% gain that traders were expecting. On a MoM basis, the machinery orders rose by 6.8%, which was higher than the minus 4% decline that traders were expecting.
The Office of National Statistics (ONS) will release GDP numbers for the UK. This will be important data because it will show the performance of the UK economy before Brexit. Traders expect the numbers to show that the economy rose by 0.1%, which will be lower than the previous growth of 0.3%. The manufacturing production is expected to move up by 0.1% which will be higher than the previous decline of minus 0.2%.
The EUR/USD pair is trading at 1.1500 where it has found some support. This level is higher than the yesterday’s low of 1.1430 and could be a turning point for the pair. The double EMA indicated below shows that the strength of the downward trend could be reducing. The momentum indicator is currently at the 100 level and rising while the MACD too shows that the pair could be starting an upward trend.
Last week, the USD/JPY reached the highest level since November last year as shown on the daily chart below. As expected, the pair then started a sharp decline that saw it reach an intraday low of 113.00 today. This level is also the middle band of the Bollinger Bands. This decline happened as bulls exited their trades with a good profit. There is a likelihood that the price will fall further, potentially to the 111.30 level which is also the 61.8% Fibonacci Retracement level before it continues with the upward trend.
The GBP/USD pair jumped to an intraday high of 1.3163. This ended the sharp decline the pair had made in the past few days as the dollar strengthened. It is now trading at the 1.3157 level which is along the middle band of the Bollinger Band as it aims to move to the important resistance level of 1.3200. The upward trend will continue as traders wait for the UK GDP numbers and further developments in Brexit negotiations.