US stocks rose yesterday after a few weeks of turmoil. The gains were broad-based, but technology played an important role in the recovery. The Nasdaq index rose by more than 100 points while the Dow gained by more than 200. These gains continued in Asia this morning. In China, the Shanghai and A50 indices rose by 1% and 1.5% respectively. Investors are optimistic that US and China will reach an agreement within the next few weeks.
The Australian dollar declined today after China released weak economic numbers. In April, industrial production rose by an annualized rate of 5.4%, which was lower than the 6.5% that traders were expecting. In March, industrial production rose by 8.5%. The fixed asset investments in the country increased by 6.1%, which was lower than the consensus estimate of 6.4%. Retail sales increased by 7.2%, lower than the expected 8.6%.
Today, traders will focus on crude oil, the Japanese yen, the USD, and the euro. On crude oil, the EIA is expected to release the inventories data. These numbers are expected to have declined by 800K in the past week. Yesterday, data from API showed that inventories rose by more than 8.6 million barrels. In Japan, the country will release the housing starts and construction orders. In Europe, Germany will release its Q1 GDP data while France will release the CPI numbers. Italy will release the industrial sales while the EU will release the GDP and employment numbers. From the US, traders will receive manufacturing data and retail sales information.
The EUR/USD pair was relatively unmoved ahead of key economic data from Europe and the United States. The pair is now trading at 1.1207, which is slightly higher than yesterday’s lows. On the hourly chart, this price is close to the middle line of the Bollinger Bands and is along the important green support shown below. The two lines of the Relative Vigor Index (RVI) are moving higher and heading closer to the neutral level. Today, the pair could resume the downward trend to test the important support of 1.1180.
The USD/JPY pair moved up slightly to the important resistance level of 109.60. This was higher than yesterday’s low of 109.00. On the four-hour chart below, this price was slightly below the 25-day and 50-day moving averages. The dots of the Parabolic SAR are on the upper side. At the same time, the RSI has continued to move up and is currently close to 50. Today, the pair could move up to test the important level of 110.
The AUD/USD pair declined to a low of 0.6920, which was the lowest level since January. This price is below the 50-day and 25-day moving averages while the RSI remains slightly above the oversold level. The money flow index has stabilized below 50 while the dots of the Parabolic SAR are on the upper side. The pair will likely continue moving lower to test the support of 0.6900.