Yesterday, Wall Street had its worst day this year after Donald Trump said he would not meet China’s Xi Jinping before the March deadline. This raised chances that a deal between the two countries on trade will not be made. This year, the two countries have been holding meetings to iron out key issues on trade. However, reports show that no major progress has been made on the issues of intellectual property and forced technology transfer. If there is no deal between the two countries by March 1, the US will add more tariffs on Chinese goods.
The Australian dollar declined today after the RBA lowered the economic forecast for the year. This week, the Aussie has declined sharply even after the initial hawkish statement from the RBA. After the meeting, the central bank brought the possibility of a rate cut if the economic conditions weaken. The lowered guidance by RBA comes a day after the European Commission and the BOE lowered the guidance for the EU and UK respectively. A few weeks ago, the IMF lowered the global growth forecast as well.
The Japanese yen was little moved after the release of key numbers from the country. In December, household spending increased by 0.1%, which was better than the contraction of -0.6% in November. It was, however, lower than the expected 0.8%. On a MoM basis, spending declined by -0.1%. The adjusted current account for the country was 1.56 trillion yen, which was better than the expected 1.52 trillion yen. Wages increased slightly to 1.8% from the previously released 1.7%.
EUR/USD
The EUR/USD pair declined slightly in overnight trading and reached an intraday low of 1.1335. This was slightly higher than yesterday’s low of 1.1325. On the hourly chart, the pair is below the 25-day and 50-day EMAs. The RSI has flattened along the 43 level while the volume-adjusted RSI has risen to the 40 level. The pair could continue to decline especially after the reduced EU growth forecast.
AUD/USD
The AUD/USD pair declined sharply after the RBA lowered the economic forecast. The pair reached a low of 0.7057, which was the lowest level since January 10. On the daily chart, the pair is along the upper line of the equidistance channel shown below. This price is also slightly below the 25-day and 50-day EMA. There is a likelihood that the pair will continue moving lower to test the important support of 0.7000.
USD/JPY
This year, the USD/JPY pair has been in consolidation mode, with the price remaining within a narrow channel. The pair is now trading at 109.77. On the daily chart, this price is along the 25-day EMA and below the 50-day and 100-day EMAs while the RSI has been largely unmoved at the 47 level. This consolidation could lead to a sharp movement in either direction in the coming few days.
