US stocks declined yesterday as traders started worrying that US tariffs on Chinese goods would remain until after the November election. Media reports indicated that the US will extend its tariffs for ten months, at which time the Trump administration will review whether China is complying with the first phase of the deal. Traders were also concerned about inflation numbers. Data from the US showed that consumer prices rose by their smallest pace in four months. The S&P500 declined by 0.2% while the Dow fell by 0.1%.
The earnings season started yesterday as the market received quarterly data from the biggest US banks. JP Morgan announced the most profitable year on record. Its total profit rose by 21% to $8.52 billion, which was boosted by a 31% revenue jump in the corporate and investment bank. Citigroup reported a 15% rise to $4.98 billion. This was boosted by a 31% increase in its equity underwriting business. On the other hand, Wells Fargo continued to struggle. The bank reported a 53% drop in Q4 profit. It also set another $1.5 billion to cover the costs associated with the fake account scandal. Today, traders will receive earnings from Bank of America, Goldman Sachs, Blackrock, Alcoa and The Charles Schwab Corporation.
Sterling moved in a sideways direction as traders remained concerned about the likelihood of a no deal Brexit. The worries are that the UK will not be able to negotiate a deal with the EU in less than a year. Meanwhile, data released on Monday showed that the UK economy struggled in November. That was a month before the December 12 election. These numbers raised a possibility that the BOE will be forced to lower rates this year. Today, we will receive the December inflation data. The market expects the prices to have remained unchanged. The CPI and core CPI are expected to remain at 1.5% and 1.7% respectively.
EUR/USD
The EUR/USD pair was unchanged at 1.1128, which is along the important resistance level shown in white below. On the hourly chart, the pair is slightly above the 23.6% Fibonacci Retracement level. The price is also along the 14-day and 28-say EMA. The pair may continue trading within this range ahead of the US PPI data, which will be released later today.
GBP/USD
The GBP/USD pair was relatively unchanged in the Asian session. The pair is trading at 1.3020, which is slightly above yesterday’s low of 1.2155. The RSI has been on an upward trend from a low of 20 to the current 57. The pair will likely see some volatility ahead and after the market receives the UK CPI data.
USD/JPY
The USD/JPY pair declined in the American and Asian session. The pair moved from a high of 110.21 to a low of 109.80. The pair has been on a strong upward trend in the past week, which has seen it rise from a low of 107.64 to yesterday’s high of 110.21. The price is along the 14-day exponential moving averages and slightly above the 28-day EMA. The pair may decline and test the important support of 109.70.
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