Dollar falls sharply in Asian trading as gold marches to another record high of 1165 today. Asia stocks are generally higher and the Japanese yen retreats a bit. But after all, yen crosses are still staying in tight range and the weakness in yen is much milder comparing to the greenback. It's believe that gold's strength is the main driver behind the selloff in greenback. As noted before, there is no clear signal of topping in gold yet and gold is likely still in progress to next medium term target at 1285. That would continue to be a major factor in preventing the greenback to stage a sizeable rebound.
St Louis Fed James Bullard said that unemployment in US is high and labor markets are lagging even though he reiterated his view that economic recovery in US has started. He also expressed his support for extending Fed's purchases of mortgage-backed securities beyond Q1 of 2010.
Looking at the dollar index, the failure to sustain above 75.76 resistance and the sharp fall today turns intraday bias neutral and mix up the near term outlook. The corrective look of the rise from 74.68 to 75.88 argues that 74.68 might not be the bottom yet. A break below 75.21 will flip intraday bias back to the downside for a new low below 74.68. But after all, we'd expect further loss of momentum and reversal after hitting 74.31 key support. On the upside, though, above 75.88 will revive the case that dollar index has bottomed at 74.68 already and will turn focus to 76.82 resistance for confirmation.
On the data front, Eurozone PMIs are the main focus in European session. Manufacturing PMI is expected to rise from 50.7 to 51.2 in November while Services PMI is expected to rise from 52.6 to 52.9, suggesting that both sectors are expanding as slightly faster pace. Canadian retail sales is expected to rise 0.6% mom in September while ex-auto sales is expected to climb 0.4%. Existing home sales in US is expected to rise to 5.7M annualized rate in October.
USD/CHF Daily Outlook
Daily Pivots: (S1) 1.0125; (P) 1.0174; (R1) 1.0226; More
USD/CHF's sharp fall today and break of 1.0122 minor support indicates that choppy rise from 1.0034 has completed already. The corrective structure argues that USD/CHF's down trend is possibly still in progress. Intraday bias is flipped back to the downside for 1.0032/34 support first and break will have a test on parity next. On the upside, though, above 1.0222 will indicate rise from 1.0034 is still in progress and will flip intraday bias back to the upside for 1.0337 resistance next.
In the bigger picture, focus remains on whether the medium term fall from 1.1963 has completed at 1.0032 already after hitting 100% projection of 1.2296 to 1.0366 from 1.1963 at 1.0033. Break of 1.0337 resistance will affirm this case by completing a double bottom reversal pattern (1.0032, 1.0034) and will target 1.0590 support turned resistance for confirmation. Also, this will argue that whole consolidation pattern from 1.2296 has completed with three waves down to 1.0032 already and up trend from 0.9634 might be resuming. On the downside, however, break of 1.0032 will indicate that the medium term fall is still in progress and should pave the way to a retest of 2008 low of 0.9634 after taking out parity.
Economic Indicators Update
|08:30||EUR||German PMI Manufacturing Nov A||51.6||51|
|08:30||EUR||German PMI Services Nov A||51.2||50.7|
|09:00||EUR||Eurozone PMI Manufacturing Nov A||51.2||50.7|
|09:00||EUR||Eurozone PMI Services Nov A||52.9||52.6|
|13:30||CAD||Retail Sales M/M Sep||0.60%||0.80%|
|13:30||CAD||Retail Sales Less Autos M/M Sep||0.40%||0.50%|
|15:00||USD||Existing Home Sales Oct||5.70M||5.57M|