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US EQUITIES FALL AGAIN AFTER WEAK HOUSING DATA

US equities ended the day lower as traders reacted to central bank decisions and relatively weaker data from the US. On Wednesday, the Fed decided to leave its policies unchanged. It also signalled that rates would remain that low for at least three more years. And yesterday, data from the US came out weaker than expected. In August, building permits declined by 0.9% to 1.47 million while housing starts fell by 5.1% to 860k. The Philadelphia Fed manufacturing index was 15.0, down from the previous 17.2. On Wednesday, retail sales from the country disappointed.

The British pound was little changed during the Asian session as traders reacted to the Bank of England decision. The bank, as expected, left its interest rate unchanged and indicated that it could lower rates below zero if the economic situation worsened. The members said that the recent wave of the virus and the upcoming expiry of the furlough program had the potential to weigh further on economic activity. In the morning session, the sterling will react to the August retail sales. Analysts expect the data will show that sales rose by 0.4% leading to a 4.2% year-on-year growth.

The Japanese yen weakened slightly against the dollar as traders reacted to weak August inflation data. The numbers showed that the headline consumer price index rose by 0.2% in August, an improvement from the previous 0.1%. The national core CPI, which excludes volatile products, declined by 0.4%. These numbers came a day after the Bank of Japan delivered its rate decision. In the decision, the bank left rates unchanged and boosted its economic forecast for the year. Later today, we will receive the Canadian retail sales, European Union current account, and the Michigan consumer sentiment.

EUR/USD

The EUR/USD pair is trading at 1.1843, which was slightly higher than this week’s low of 1.1748. The price has also moved slightly above the 50-day and 100-day moving averages. It is also along the lower line of the ascending channel while the Relative Strength Index (RSI) has started to rise. Therefore, the pair is likely to continue rising today as traders aim for the previous resistance at 1.1900.

GBP/USD

The GBP/USD pair was little changed after the BOE decision. It is trading at 1.2942, which is along the same channel it has been since Tuesday. On the four-hour chart, the price is between the 50-day and 100-day simple moving average. The signal and main line of the MACD have also moved above the neutral line. Importantly, the pair has formed an ascending wedge pattern, that is shown in red. This implies that the pair will break out lower in the near term.

AUD/USD

The AUD/USD pair is trading at 0.7320, which is slightly higher than this week’s low of 0.7250. On the four-hour chart, the price is above the 50-day and 100-day moving averages. It is also above the ascending trendline that is shown in white. The Chaikin oscillator has also moved above the neutral line. Therefore, the pair is likely to continue rising as bulls aim for the next resistance at 0.7300.

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