The Japanese yen declined slightly against the USD after the country released its earnings and spending data. In March, the average cash earnings declined by 1.9%, which was worse than the expected drop of -0.5%. This was the worst decline in more than four years. In the same month, household spending rose by a yearly rate of 2.1%, which was better than the expected 1.7%. On a MoM basis, spending increased by 0.1%.
The US dollar index declined after Trump said that new China tariffs will go into effect later today. In a statement yesterday, the president also threatened to add more tariffs. This happened as China’s Liu He arrived in Washington to continue the negotiations. Today, USD traders will focus on the US inflation data. In April, the core CPI is expected to rise by 2.1%, which will be higher than the 2.0% experienced in March. On a MoM basis, it is expected to rise by 0.2%. The headline CPI is expected to rise by 2.1%, higher than the previous 1.9%.
Traders will also pay close attention to the UK economic data. Data from the Office of National Statistics (ONS) is expected to show that the economy expanded by 1.8% in the first quarter. On a QoQ basis, it is expected to have expanded by 0.5%. In March, the manufacturing production is expected to rise by 1.3% while the industrial production is expected to rise by 0.5%. The trade deficit is expected to decline slightly to 13.8 billion pounds. In addition to the UK, traders will focus on the Canadian employment data where they expect the unemployment rate to remain unchanged at 5.8%.
EUR/USD
The EUR/USD pair rose sharply in overnight trading, breaking the previous triangle pattern. The pair reached a high of 1.1250 and eased a bit. It is now trading at 1.1230, which is slightly above the 25-day and 50-day moving averages on the hourly chart. This price is also above the upper line of the triangular pattern. The MACD has remained above the neutral line. Today, the pair could see some volatility as traders receive US CPI data and as the new tariffs on China goods come into effect.
USD/JPY
This week, the USD/JPY pair has continued the downward trend started in late April. The pair has dropped from a high of 112.40 to a low of 109.46. Today, the pair moved up slightly after the weak income data from Japan. The price is now below the 50-day and 25-day moving averages, while the RSI has remained along the oversold level. The pair could see some volatility ahead of the US CPI and trade news.
GBP/USD
The GBP/USD pair was relatively unmoved in today’s trading as investors waited for the UK data. The pair is trading at 1.3015, which is along the 50% Fibonacci Retracement level and the 25-day moving average. On the hourly chart, the volumes have declined while the accumulation/distribution indicator has remained a bit higher. Today, the pair will likely be a bit volatile because of the UK and US economic data.
