The euro remained lower in overnight trading after the ECB monetary policy decision. Yesterday, the bank released its decision, which was aimed at boosting the European economy. In the statement, the bank extended the period at which it will likely raise interest rates from the previously-guided ‘through summer’ to after December. In addition, the bank announced a fresh round of cheap loans to European banks, which will help stimulate growth through lending. At the core of this decision was the need for a weaker euro, which will help improve the export sector, which is a major supporter of the European economy. A weaker currency helps export-based countries by making their goods cheaper.
US stocks ended the day lower, extending a losing streak that started this week. The Dow, S&P and Nasdaq lost 78, 81 and 113 basis points respectively. The main reason for the declining stocks is fear on global growth. With a trade deal between China and US already priced-in, investors are worried about what will stimulate growth next. In response to the bearish US stock market, Asian stocks declined after a report that Chinese exports had declined in February. Exports declined by 20.7% in the month, which was a sharper decline than the 4.8% decline that investors were expecting. On a month-over-month basis, exports declined by 5.2% and the trade surplus reduced to $4.2 billion from the previous month’s $39 billion.
The Japanese yen gained against the USD after the release of important GDP numbers from the country. In the fourth quarter, the economy expanded by an annualized rate of 1.9%, which was better than the expected 1.8%. on a monthly basis, the economy expanded by 0.5%, higher than the expected 0.4%. The economic growth was boosted by the increase in consumer spending but offset by the low capital expenditure, which rose by 2.7%.
The dollar index moved slightly higher ahead of official US jobs numbers, which are expected today. The numbers are expected to show that the economy created more than 180K jobs in February while the unemployment rate is expected to fall to 3.9%. Wages are expected to grow by 3.3%. These numbers come a day after numbers from Challenger showed that layoffs had increased in February. The ADP numbers released on Wednesday showed that the economy created 183K jobs in the month.
Yesterday, the EURUSD pair declined sharply from a high of 1.1320 to a low of 1.1175. This was the lowest level since July 2017. On the hourly chart, the pair is below all the short and medium-term moving averages. The RSI has remained in the oversold zone while the Bull’s Power has eased. The pair will likely see some gains today although the trend will likely remain bearish. This could change depending on the US jobs numbers expected later today.
The USDJPY pair declined in overnight trading after the release of better economic growth numbers. The pair reached an intraday low of 111.23, which was the lowest level since last week. On the hourly-chart, the pair has been declining since peaking on Monday when it reached a high of 112.13. This price is below the 21-day and 42-day moving averages while the Ichimonku Kinko Hyo shows that the pair could continue to decline. This is supported by the Relative Strength Index, which too has been declining.
The USDCAD pair resumed the upward trend and reached a high of 1.3456. This was close to the highest level this year. Traders are looking ahead to US and Canadian jobs numbers expected later today. On the hourly chart, the pair was above the 21-day and 42-day moving averages. The money flow index, which is a volume-based RSI rose close to the overbought level of 80. While it could gain, the pair could reverse after the jobs numbers.