Thursday's session on Wall Street brought a recovery from Nasdaq, growing at 3.35%, and the SP500 returned above 270 points (+1.86%). But investors in Asia have not decided to continue to grow in concerns about the weakening of global growth indicated as the main reason. Japanese Nikkei225 drops 0.9% today, while Chinese Shanghai Composite loses 0.6%.
The currency market dominates the purchase of USD. USD / CNY increased to 6.9682 - the highest since 2008, although later the Chinese yuan started to bounce back. The pressure to weaken the yuan hit AUD and NZD. AUD / USD at 0.7021 was the lowest since Q1 2016. EUR / USD stays at 1.1370, USD / JPY has not moved much and drifts at 112.20.
Crude oil prices reflect earlier increases and WTI is now dropping 1%. up to 66.6 USD / b. Gold continues to consolidate and is now at 1232 USD / oz.
On Friday, the 26th of October, the event calendar is light in important data releases, mainly during the London session, because during the NY session, the global investors should keep an eye on GDP and UoM Consumer Sentiment data from the US. Moreover, there is another speech from ECB President Mario Draghi scheduled for today as well.
USD/JPY analysis for 26/10/2018:
The National CPI data from Japan were released overnight and the data were in line with expectations. The CPI increased from 1.3% to 1.5% as expected and the CPI excluding Fresh Food has been unchanged at the level of 1.0%.
National Consumer Price Index (CPI) is the key gauge for inflation in Japan. Simply put, inflation reflects a decline in the purchasing power of the Yen, where each Yen buys fewer goods and services. In terms of measuring inflation, CPI is the most obvious way to quantify changes in purchasing power. The report tracks changes in the price of a basket of goods and services that a typical Japanese household might purchase. An increase in the index indicates that it takes more Yen to purchase this same set of basic consumer items. Markets will typically pay more attention to "CPI excluding Fresh Food," because it excludes volatile food prices that can distort overall CPI. The headline figure for CPI is the percentage change in the index on a month to month or year to year basis.
Let's now take a look at the USD/JPY technical picture at the H4 time frame. The short-term consolidation continues on this market as the price is trading between the levels of 112.81 - 111.82. The market conditions are neutral, whcih can be seen by stochastic and RSI indicators. The market participants must now wait for the price to decide which way it wants to go because this consolidation will not last forever. Please keep an eye on this market as it can create a good trading setup any time now.