Yen in holding pattern as Japan’s exports slide to record lows

The Japanese yen was little changed today after the statistics office released the May trade numbers. The data showed that the country’s exports and imports declined at a record pace. Exports fell by 28.3% while imports fell by 26.2%. This is after the two declined by 21.9% and 7.1% respectively in April. As a result, the country had a trade deficit of more than 833.4 billion yen, which was higher than the expected 560 billion yen. These numbers came a day after the Bank of Japan delivered its interest rate decision. It left interest rates unchanged, continued with its yield curve control and quantitative easing programs.

The British pound declined against the US dollar in overnight trading. That was partly because of a stronger dollar and the fact that the Bank of England will start its monetary policy meeting today and release the decision tomorrow. Analysts expect the bank to leave rates unchanged and possibly announce more measures to stimulate the economy. These measures could include adding £200 billion to its quantitative easing program and even launching a yield curve control program. In the morning session today, we will receive the country’s inflation data for May.

The euro declined sharply in the American session partly because of the strong US retail sales data. The numbers showed that sales rose by more than 17% while the core retail sales rose by 12.4%. Later today, the euro will react to the eurozone’s consumer price index data. Analysts polled by Blomberg expect that the headline CPI declined by 0.1% in May after rising by 0.3% in the previous month. They also expect the core CPI to remain unchanged at 0.8%.

Other key economic data released today are crude oil inventories from the United States, Canadian inflation numbers, and US building permits and housing starts.

EUR/USD

The EUR/USD pair declined to a low of 1.1226 during the American session. On the four-hour chart, the price is below the 50-day exponential moving average and slightly above the 100-day EMA. Also, the pair has formed a head and shoulders pattern and is now below the right shoulder. It is also slightly above the lower side of the Ichimoku cloud. Therefore, there is a likelihood that the price will continue moving lower and possibly test the support at 1.1200.

USD/JPY

The USD/JPY pair remained in a holding pattern even after Japan released weak trade numbers. The pair is now trading at 107.20, which is below this month’s high of 109.83. On the four-hour chart, the price is below the 61.8% Fibonacci retracement level. It is also slightly below the 50-day and 100-day exponential moving averages. The price is forming a bearish flag pattern, which sends a signal that it may continue falling.

AUD/USD

The AUD/USD pair declined slightly during the American and Asian sessions. It is trading at 0.6860, which is lower than this month’s high of 0.7067. On the four-hour chart, the price is attempting to move below the 100-day exponential moving average. Also, the oscillator of the moving average is attempting to move below the neutral line. This means that the price may continue falling as bears attempt to test the important support at 0.6700.