Asian stocks declined today as investors worried about the impact of the communist party meeting. The biggest outcome of the parliamentary session was in Hong Kong, where members voted to increase their security engagement in the autonomous city. This vote risks additional protests in Hong Kong, which is already going through its worst recession in years. Investors are also questioning the US-China relations after Trump accused Xi of misleading the world on coronavirus. In Hong Kong, the Hang Seng index declined by more than 3% while in the US, the Dow Jones lost more than 100 points.
The Japanese yen gained slightly after the Bank of Japan held an emergency meeting. In an announcement, the bank said that it would launch a new lending facility to help small and medium enterprises that are suffering from the current pandemic. The bank also extended the deadline for a series of measures it announced a few months ago. For example, it will accelerate its corporate bond buying program by 6 months. In the meeting, the bank left interest rates unchanged at -0.10% and pledged to guide its 10-year yield to about 0%.
The economic calendar will be a bit light today. The biggest data will be from the UK, where the Office of National Statistics (ONS) will release the retail sales numbers of April. Analysts expect that retail sales declined by 22.2% in April, with the core sales falling by 18.2%. Mexico and Canada will also release their retail sales data. Other big news will be from Europe, where the European Central Bank (ECB) will release the minutes of the previous meeting.
The EUR/USD pair declined from yesterday’s high of 1.1000 to a low of 1.0938. On the hourly chart, this price is slightly below the 25-day and 50-day exponential moving averages and is slightly above the 61.8% Fibonacci Retracement level. The RSI has also been falling and is now at 40. Besides, the pair has formed a small bearish flag pattern, which means that it may continue falling as bears attempt to test the support at 1.0920.
The XBR/USD pair declined slightly to a low of 35.68. On the four-hour chart, the price is slightly above the 38.2% retracement level. The price is above the 50-day and 100-day EMAs. Also, the price seems to be in an overall upward trend and is being guided by the yellow line. The pair may continue rising as bulls attempt to test the 50% retracement at 39.38.
The USD/JPY pair was little changed today as the market reacted to new actions by the Bank of Japan. It is trading at 107.61, which is along the 61.8% retracement level. It is also consolidating around the 50-day and 100-day EMAs. Also, the pair’s volatility, as measured by the Average True Range has been falling. This means that the price may see a significant breakout in the near term.