After strong rebound overnight, dollar is steadily in range on mildly weaker Asian stocks. Fed said it would reduce the maturity on backstop loans from 90 days to 28 days, which is seen as another step towards stimulus exits. Yen strengthen against dollar and euro on banking concern in Japan. Nikkei dropped -0.55% today and continues to trade below the head and shoulder top neckline and the development will continue to support the Japanese yen.
Main focus in the European session will be on BoE minutes. The GBP 25b extension of the asset purchased program announced earlier in November was lower than markets's expectation of GBP 50b and help lifted Sterling. Nevertheless, BoE Governor King's comment that the bank is open mind to further extension is so far limiting Sterling's strength. Investors will be particularly interested in the vote split revealed in the minutes and relevant comments on how open mind is BoE regarding QE extension. Other information would likely be similar to those revealed in the Quarterly Inflation Report released last week.
Inflation data will be the main focus in US session. US CPI is expected to rise sharply from -1.3% yoy to 0.3% yoy in October while core CPI is expected climb from 1.5% yoy to 1.6% yoy. Housing starts and Building permits are expected to rise slightly to 598k and 580k respectively in October. Canadian CPI is expected to turn positive to 0.2% yoy in October with core CPI rising to 1.8% yoy.
Looking at the dollar index, while the rebound from 74.68 was strong, it's still limited below 75.76 near term resistance and thus there is no confirmation of bottoming yet. Another fall to below 74.68 could still be seen but downside is expected to be contained by 74.31 on loss of downside momentum. However, a break above 75.76 suggest that a fall from 76.82 has completed and will turn focus back to this resistance.
USD/JPY Daily Outlook
Daily Pivots: (S1) 88.81; (P) 89.17; (R1) 89.61; More.
With 4 hours MACD crossed above signal line, intraday bias in USD/JPY is turned neutral for the moment and some sideway trading might be seen. Nevertheless, break of 90.06 resistance is still needed to indicate that choppy fall from 92.31 has completed. Otherwise, outlook remains bearish and another fall should still be seen. Below 88.73 will target a test on 88.00 low first. Break will target a test on key support of 87.12 low.
In the bigger picture, the bearish outlook remains unchanged. Fall from 101.43 is treated as resumption of the whole down trend from 124.13. Break of 87.12 low will confirm resumption of this down trend and should target next key level of 1995 low at 79.75. However, note that break of 92.31 resistance will firstly suggest that fall from 97.77 has completed. Additionally, this will raise the possibility that whole decline from 101.43 has finished with three waves down to 88.00 after meeting 100% projection of 101.43 to 91.73 from 97.77 at 88.07. The three wave structure will in turn indicate that rise from 87.12 is going to resume. Further break of 97.77 will target a retest of 101.43 instead.
Economic Indicators Update
|0:00||AUD||Westpac Leading Index M/M Sep||0.90%||--||1.10%||1.30%|
|9:00||EUR||Eurozone Current Account (EUR) Sep||0.6B||-1.3B|
|9:30||GBP||BoE Meeting Minutes||0--0--9||0--0--9|
|11:00||GBP||U.K. CBI Industrial Trends Total Orders Nov||-47||-51|
|12:00||CAD||CPI M/M Oct||0.10%||0.00%|
|12:00||CAD||CPI Y/Y Oct||0.20%||-0.90%|
|12:00||CAD||BoC CPI Core M/M Oct||0.10%||0.30%|
|12:00||CAD||BoC CPI Core Y/Y Oct||1.80%||1.50%|
|13:30||USD||CPI M/M Oct||0.20%||0.20%|
|13:30||USD||CPI Y/Y Oct||-0.30%||-1.30%|
|13:30||USD||CPI Core M/M Oct||0.10%||0.20%|
|13:30||USD||CPI Core Y/Y Oct||1.60%||1.50%|
|13:30||USD||Housing Starts Oct||598K||590K|
|13:30||USD||Building Permits Oct||580K||573K|
|15:30||USD||Crude Oil Inventories||1.2M||1.8M|